Nonprofit Strategy in Six Words (none of which are curses)

When I was in elementary school we were taught how to write a newspaper article by using the 5 Ws: where, what, why, who and when. Nonprofit strategy isn’t much different, though we do add a how.  In both cases you’re painting a picture and telling a story. Our story is about how we change the world. 

Where are we going? How are we going to conduct ourselves along the way? Who do we serve? What are we doing? Why?

If you subscribe to the Simon Sinek theory of why –  and I do – you know that no one cares about the what or the how; they care about the why.  In his amazing and highly recommended Ted Talk, How great leaders inspire action, he says “People don’t buy what you do; they buy why you do it. And what you do simply proves what you believe.” Which begs the question:  What is it that you believe?

Nonprofit strategy is born from what you believe.

That’s why I always start with values.  Values are the how.  How do you conduct yourself?  How do you talk to and about your clients? What do you value as an organization? How does that impact the culture and the work?

Your mission statement is the why. It’s why your organization exists.

Boys & Girls Clubs of America’s mission is to “enable all young people, especially those who need us most, to reach their full potential as productive, caring, responsible citizens.”

Local Matters’ mission – I was honored to facilitate the discussion when it was drafted – is “to create healthy communities through food education, access and advocacy.”

Speaking of Local Matters, they illustrated for me the need for organizations to have both a utopian vision and a 3 year vision.  As they explained it to me, and as I now explain it to others “The utopian vision is the reason you get up every morning.”  It’s the long term where.

The 3 year vision is the more immediate where. It answers where you are going, now. It set the path for your future.

Who? It seems like such an easy question. Who do we serve? As I learned when facilitating Columbus’ theory of change for Opportunity Youth, setting the who is not easy at all. In case you are not aware, Opportunity Youth are 16-24 year olds who are not in school and are not working.  And just to be clear, we’re not talking about your friend’s kid who’s backpacking across Europe. We’re talking about the young people who got thrown out, aged out, were abused or left out. It’s an enormous number of young people and you’d think that deciding who belongs in that group would be easy, but it’s not. 

Who is also about inclusion. How do you include those you serve in your plans? We should never be doing for communities without communities.

The final who is who is doing the work? All good strategies have metrics. Metrics are managed by the more immediate who, when and what. When will it be done? How will you know?

Any strategy that doesn’t have metrics is a wish list. Don’t create those and don’t accept them. I also recommend you try to keep plans relatively short. I tend to believe that the longer a plan is, the less likely it is to get completed. 

Finally, strategy setting is a role of the Board. It should not be done by the Executive leader alone in their office.  It should be done by the entire Board or a subset of the Board that is informing and getting buy in from the full Board along the way. As I tell my students and my clients, any plan you write alone in your office you will execute alone in your office.

That’s it! Five Ws, one H. No cursing. Throw in an environmental scan, a SWOT analysis and an issue exercise and you’ve got yourself a strategy to help you align the work of your organization.

What’s your experience with strategy setting? What would you add, or delete? As always, I welcome your insight, feedback and experience. Please offer your ideas or suggestions for blog topics and consider hitting the follow button to enter your email. A rising tide raises all boats.

The Implications of Donor Advised Funds on the Charity You Love

Donor Advised Funds (DAFs) were created to be a charitable option for those who have or have received a significant influx of funds. They are touted as a way to democratize philanthropy. DAFs have opened up vehicles for giving to midsize donors in a way that family foundations could not. For the first time, donors with sometimes four but more often five-figure gifts to donate could do so, long term.  Of course, they could always do so short term. 

Despite the DAF commercials you may have seen (Wells Fargo wins for the most appalling), it was always possible to donate a significant gift straight to the nonprofit of your choosing.  What wasn’t available was a long-term option, other than a family foundation, which is expensive to start and has significant compliance obligations.

The introduction of DAFs allow a donor to get an immediate tax deduction, while they – in theory – can research where they want to spend their philanthropic dollars, later.

To be clear, it’s called Donor ADVISED Funds for a reason.  The donor can advise the DAF sponsor on where they want the gift to go.  The DAF sponsor usually sends it to the intended destination but reserves the right not to based on the law, the mission of the recipient organization and the sponsor’s internal policies. For example, your local Jewish Foundation will likely grant your recommendation to send a gift to your local Jewish Community Center, but not likely to your local hate group. 

There are a few requirements of the donor.  DAF funds cannot be used to pay a pledge.  In fact, the donor can‘t receive any benefit from the gift – this is standard for any gift you want to deduct. It’s why you can’t deduct the full cost of the gala you went to last weekend but can deduct the cost of the ticket minus the expenses to the charity.  In the case of DAFs, you can’t buy the ticket with those funds at all, since you received a benefit (gala tickets) for your gift.

DAFs can be named for your family, or whatever or whomever you’d like.  You can name it your initials, or for your dog. That makes it difficult for charities to prospect, thank or steward gifts received from those who have DAFs, or even to know from whom their most recent donation arrived. 

Another challenge for our field is that there’s no requirement that money be given out. There’s also no requirement that the name of the donor be released. In fact, there are rules against their names being released. You read that right: a donor can park significant resources in a donor advised fund, which is then owned by the DAF sponsor, to be given out without attribution to the donor, at the donor’s leisure or not at all.  In all cases, the donor gets an immediate tax benefit.

Actual charities may get nothing. The government definitely gets nothing because it goes in and continues to grow tax free. No taxes get paid. The data  suggests that donor-advised funds have a net negative effect.

The only ones who consistently benefit is the donor and the fund owner, which may not actually be a charity at all, and likely will be a for profit company managing a “nonprofit spin off.”  Here’s the Chronicle’s explanation “Much of the criticism is directed at Fidelity Charitable and other sponsors of donor-advised funds that are nonprofit spinoffs of financial-service firms. These organizations typically pay their for-profit parent to manage the money in the funds, which means they have a financial incentive to accumulate assets and hold onto them.”

How it works is this: A donor sets up a donor advised fund, either at a community foundation, or at a for-profit company that manages “a charitable institution.” The word charity is used in the loosest way, meaning under the law it’s a charity, but in reality it provides no services other than as a vehicle to house funds which will be given out at a later date, maybe. It will generate annual fees for the sponsoring institution, often but not exclusively a for profit entity, in perpetuity.

That’s part of the challenge for the nonprofit field, and the government. DAFs take huge amounts of money out of the economy, and out of the charity designation pot each year that actual charities providing real services may never see. Unlike foundations, there’s no distribution rules. Even the DAFs housed in foundations have no distribution requirement.

In other words, you could sell a business for $100 million today and put some portion of that money in a donor advised fund.  You would get an immediate tax deduction and the donation could sit there … in perpetuity.

Those who are fans of Donor Advised Funds will argue that money is given out. They say that even more money is given out because of DAFs. But because most of the giving, the “owning” and the management of donor advised funds is done in secrecy, we don’t really know. The only thing that is reported is the amount of aggregate gifts given to actual charities by the institution. So it’s possible – and even likely – that one DAF giving significant (and actual) gifts is providing cover for the other funds providing no benefit to the community, and only benefit to the donor and the institution managing the DAFs.

A smaller challenge is that many agencies don’t know how to properly thank donors who send gifts from donor-advised funds.  Because they may not understand that the gift came from a DAF, meaning the deduction has already been granted, they may send a letter with tax deductible language. The donor may not notice when the letter comes in but totally notices when they’re trying to figure out their taxes at the end of the year.

To be clear, there is a fairly significant section of nonprofit leaders who like Donor Advised Funds and many leaders do not care from whom the money comes or by what vehicle it arrives, as long as it comes.  Some will say, and they will be right, that if you know your donors, you know who has a DAF and this is not a problem.  Is that true? Sometimes. 

It’s critical nonprofits know from whom they’re receiving gifts.  There are too many instance of charities taking money from people or companies who later embarrassed them, or publicly compromised their principles or values. If you don’t know, you can’t protect your organization.

Still, some leaders love DAFs.  Of course, leaders of community foundations love them.  Community Foundations are a huge holder of DAFs.  I appreciate that and if you insist on starting one, please consider the community foundation in your area. 

There are even some charities who have started managing DAFs themselves.  Many of the big nonprofits have started their own, often aligned with their organizational values and with a requirement that a portion of the funds go to them. Still, the charities and the community foundations don’t come close to the big companies.

As far as charitable recipients, Fidelity Charitable is at the top, coming in at #1 for the second year running and in the second spot for the five preceding years of charitable data. DAFs are so significantly represented that a full 50% of the top 10 recipients of charitable funds in 2017 are sponsors of funds and not community serving, program providing, (actual) charities.  One is a community foundation. 

The six largest recipients of charitable gifts are housing but not spending that money! That money is only benefiting the holder by accruing interest and fees for the institution. It is not immediately, or possibly ever going to an actual charity doing meaningful work in a community.

I fear Donor Advised Funds will eventually preclude our ability to do our work and affect change for our communities.

The DAF debate is happening at the same time that the field and the world is beginning to challenge status quo of philanthropy. 

The following questions are currently being discussed:

When does being donor focused come at the expense of the mission, clients or community?

Should deductions be tied to community need?

Does the current model of philanthropy promote inequity?

How do nonprofits distinguish themselves in a world of social enterprise?

Does big philanthropy reinforce the inequity it purports to address?

What’s your take on DAFS? Are you asking, and how do you answer the questions listed?  I welcome your feedback, insight and experience.  A rising tide raises all boats.

Who Trained Your Board?

The sentence I have repeated the most this month is this “your board will be as good as whomever trained them, which was possibly no one.” I’ve said that nine times, thus far, and it’s only the 13^th.

Your Board will only be as good as whomever trained them, which actually may have been no one. The vast majority of Board members I have come across in my 25+ years in this field, including earlier in my career some of my own, have not been formally trained to their role.

Untrained Board members will do what they think is right, which may or may not be aligned with anything anyone else is doing, may or may not be aligned with the strategic plan of the agency and may not, in fact, be right.

Whose fault is that? It’s ours. Executive leaders are responsible for ensuring good Board process. Sure, it’s up to actual Board members to follow that process, but it’s our jobs to make sure it’s there to be followed.

We have a horrible history in this field of following the baptism by fire training model. It’s how I was trained. It’s likely how you were trained. It’s a bad model. Here’s the truth:

If you are frustrated that

• your Board is not doing their job
• they keep overstepping into your job
• you keep having to overstep into their job
• your board president is micromanaging
• your board is not raising money
• your board glazes because they do not understand the financials

It may be because they don’t understand what their job is- BECAUSE NO ONE HAS TRAINED THEM. If you want your board members to know what their job is, it’s your obligation to train them.

Just so we’re crystal clear, when I say trained, I don’t mean give an orientation on your agency (though props to you if you do that). I don’t mean handing new Board members a packet. Let me say once and for all: there is no such thing as training by Board packet. That’s not training. That’s reading. It’s not nothing, but it’s not enough.

I recommend you offer an actual Board training, annually or more often if you can get away with it, that outlines:

• Board Role and Responsibilities
• Duties under the Law
• An overview of the intent of by-laws (called Code of Regulations in Ohio) and the specifics of yours
• Officer Roles and the Executive’s Role
• Committees structure, charts of work, goals and expectations
• Conflicts of Interests
• Board Governance Models
• Basic Rules of Roberts Rules of Order (if that’s the model you follow, and it is for most agencies)
• Meeting Structure
• Governance Modes and Generative Governance Techniques

What do you have here? An opportunity! Float the idea. Ask about what your Board is interested.  What would they like to learn?  Make sure you offer options.

Here are some for your and their consideration:

• Art of the Ask
• Board Process – agendas setting, committees,  strategy, structure, engagement
• Basic Board responsibilities- fiduciary and legal
• Board vs Staff roles
• Best Practices of Effective Boards
• Mission relevant information

In the absence of Board training, executives are sometimes, either by choice or by vacuum, put in the position of fulfilling roles that are not their roles to fill. If you are doing their job, they are not. That also means you are not doing your job. Just because it needs to be done does not mean it needs to be done by you. Train your Board to fulfill their role, and then let them. If they aren’t doing what you want, it may be because you’re doing it. Stop.

It’s almost 2018, and as I mentioned in 8 things to stop doing in 2017, “the work of the Board gets done by committees. If you do not have committees, I encourage you to work to introduce them. Please click over to read Board Work via Board Committees.

In the absence of committees or even in the presence of them, you may still be doing their job. The easiest way to tell if you are is to consider who speaks the most at Board meetings. If it’s you, there’s your answer.

If they don’t do it and you do, you’ll keep doing it. You have to give it back.

How? By saying to each committee chair “I just learned that the Chairs of each committee should be leading the committee meetings and giving the committee reports at Board meetings. Would you be willing to do so? I’m happy to sit with you prior to the meeting and go over the report and help brainstorm the answers to expected questions.” “Oh, you don’t want to or won’t be there?”

Yes I know this is where you step into the breach. Resist.

“Ok, who should we ask to report instead?”

You can set committee chairs up to succeed. You can call and ask them to set a committee meeting. You can even suggest times, date and write the agenda. You can send out the invitations. You can prep them to chair the meeting. You can whisper in their ear during the meeting and even type up the minutes afterward. But you can’t lead the committee meeting or report out on it at the board meeting.

If you have tried and failed to give back the work of the committee to its Chair, you then can go to the Board Chair and/or the other Officers and ask for advice. Like this “Committee X hasn’t been meeting and /or seems to be having a hard time achieving their goals. Would you mind checking in with them and nudging them along?” “Oh, you have and nothing has changed? How would you like to handle that?”

While it is your Board to help develop, it’s not your Board to run or to manage. It’s not your committee and it’s not your meeting. It’s a Board meeting. The Board members should be talking; you should be there to listen, answer questions, present your report, make recommendations and offer support and guidance. You should not be the person in the room talking the most. If you are, they are not. We want them to lead. That may mean you have to let them.

Set your Board members up to succeed and they will help you lead your agency to heights you can’t even imagine today. Your agency will be stronger for it. As an added bonus, you’ll be less frustrated.”

Executives get a lot done by sheer willpower. Strong executives coupled with strong Boards, can lead our agencies to places no leader can get alone. Together, we can be unstoppable and because of the strength of our nonprofits, our communities can be stronger.

How have you trained your Board?  Board members, how were you trained? How has either improved your agency? As always, I welcome your insight, feedback and experience. Please share your ideas or suggestions for blog topics and consider hitting the follow button to enter your email. A rising tide raises all boats

Things Nonprofit Boards of Directors Can Do, But Shouldn’t

Serving on the Board of Directors of a nonprofit is an honor and a privilege as well as a job and a liability.  As with any job, there are things that you cannot do because they’re illegal and things that you should not do because they’re inappropriate and/or unethical.

Here is a list of things Board members shouldn’t do, even though, technically, they can.

Pay Yourselves

I had the privilege of co-facilitating a training recently and no less than five representatives of different agencies stood up and asked us follow up questions when we said Board members shouldn’t get paid.

Here are a few of the questions:

“Can we pay them a stipend?”

“Can we give them a gift card?”

“We really can’t pay them?”

Um…no.

It is not illegal to pay Board members, but it is widely considered to be inappropriate in a charitable institution that is soliciting donations from its community. The one exception is when the (paid) executive director has an ex-officio seat on the Board. Other than that, staff shouldn’t be on the Board and the Board shouldn’t be paid.

You can pay mileage to and from the Board meeting and reimburse expenses when Board members are on agency business. You can, but you really shouldn’t, pay Board members for doing the work of the Board of a community agency.

Assign Work to Staff, other than the CEO

Boards have one employee, the CEO.  Every other employee works for that CEO.  The CEO’s role is to lead the staff, support the Board, manage the day to day operations and serve as the face of the organization in the community. It is the CEO’s role to execute the strategic plan in support of the mission and vision of the organization.

It is hard to sit in a Board committee meeting that is staffed by a senior yet non-executive leader of the agency and not assign work to that staff member. Work often gets assigned in such meetings and it likely there is a process in place for the staff member to go back to the CEO and update her on the results of the meeting. That’s not what I mean. What I mean is the Chair of the committee or of the Board directly assigning work to a staff member, outside of a committee or Board meeting and unbeknownst to the CEO.

When Boards choose to not honor the “one employee” rule, and assign work to staff, it quickly becomes very confusing whose instructions take precedence and whom will be held to account. It also plants a seed that challenges the CEO’s legitimacy.  That seed (of dissent) grows and eventually it becomes difficult for the CEO to maintain his or her position, either because they quit, or challenge the Board’s overstep and are fired.

Hire Staff

Since we’re already here, let’s keep going. The only staff Boards should hire is their CEO. All other staff should be hired by that CEO. There will come a time when you do not have a CEO and also have other positions open. It will seem reasonable to try to hire some of those positions in the interim. Resist!

You don’t know what skills your new CEO will have, so it is unlikely you will be able to hire someone to complement those skills. Unless you have organizational values that you will expect your CEO to honor (which you should also be asking about in the CEO search process), you won’t know which values are important to your new CEO and won’t be able to see if the person you want to hire is a match. It is as likely that whomever you hire will not be a good fit for the team already in place and since you know them but don’t directly work with them, you might not be able to assess that.  You want the CEO to build their own team. That may mean you have to let them.

If you must, hire someone as a temporary with the option to stay at the discretion of the new CEO. That sets the tone for both the new person and the new CEO that the Board understands the difference in roles.

Avoid Fund Raising

Boards are tasked with securing the resources of the organization. I’ve heard consultants say that Board don’t have to fund raise, but it is very rarely true. Fund raising is a group effort, led by the leaders.

The CEO cannot raise money alone. The Development Director cannot raise money alone. Fund raising works best in a culture of philanthropy when both the staff and the Board are working together.

The Board’s role is to set the fund raising goal, financially support the agency themselves, embark on the campaign, open doors, introduce staff, “make the ask” when appropriate, pick up the tab for lunch when possible, and thank the donor.

The staff is responsible for training the Board, coordinating the assignments, preparing the askers with relevant donor information, drafting and supplying whatever written information will be left with the donor, including a letter asking for a specific dollar amount, attending the meetings as necessary and documenting the meeting in the database as well as writing the formal thank you note, and then creating a plan to steward the donor.

Unless you are getting all of your money from program fees, and if you are you may have issues with the public support test, fund raising is one of the five roles of the Board.

Do Business with the Agency you Serve

The law allows Board members to “do business” with the agency they serve if it is at “fair market value.” Do not be fooled. This is a case of the law allowing something that it’s likely public opinion will not support. Just because something is allowed does not make it right. It is an enormous conflict of interest and a quick way to get a spot on the front page of the paper for all the wrong reasons.  If you are on the Board, do not do business with the agency you serve.

What things have you seen Boards do that they shouldn’t?  Any advice to share? As always, I welcome your insight, feedback and experience. Please offer your ideas or suggestions for blog topics and consider hitting the follow button. A rising tide raises all boats.

Thank you!

2015 has been a fabulous year for me and for Non Profit Evolution. Thank you for being a part of it!

I had the chance to do one big project and one small one for Boys & Girls Clubs of America. I have never once regretted drinking the blue BGCA Kool-Aid in 2002. I am honored to continue to work in the movement.

Scott Caine and I introduced Board Builder and together were invited to present its inaugural session at the Columbus Foundation, and in response to overwhelming interest, were invited back to do it again! 188 leaders from over 50 agencies attended. It was awesome!

Rob Greenbaum, Associate Dean at the John Glenn College of Public Affairs at The Ohio State University was in the audience at one of the Foundation sessions. He and Jozef C. Raadschelders invited me to teach Introduction to Nonprofit Organizations, which allowed me to fulfill a long time goal to teach at the college level. I absolutely love teaching! I knew I would but it is even more fun and more challenging than I thought it would be. The students are smart and interesting, bold and funny. I hope to continue to teach at the Glenn College for many years to come. To have been given this opportunity is an honor and a privilege.

Steven Fields of Huntington Bank invited us to give the keynote at Seeds for Growth and, later, to train some of Huntington’s leaders that serve on community Boards. JobsOhio invited us to do the same.

The Central Ohio’s Association of Fund Raising Professionals invited me to moderate a session on Working with Influential Volunteers and a lunch discussion on small shops.

Community Shares of Mid Ohio invited me to present to their members not once, not twice but three times; I presented Board Development, Engaging the Board you Have as well as Fund Raising is an Art, not a Science. They have agencies from all walks of life, working all over the state. I always enjoy my time in their midst. Community Shares also manages the Young Nonprofit Professionals Network who invited me to present the “So, You Want to Be A Nonprofit Executive?” at their inaugural meeting.

DonorPath’s reach and services exploded and I now have the opportunity to serve a breadth and depth of clients that I could have never reach alone. It has been so much fun to help agencies across the country reach their fund raising goals and to be part of a group that provides low cost solutions to fund raising challenges.

The Executives I coach continue to amaze me with their insight, leadership, bravery and courage. They stand and fight every day to move their missions forward. I am delighted to stand with each one of them.

I’m also so grateful to the Boards who have invited me in to help them strengthen their processes and meet their goals of building stronger and more aligned agencies. 12-20 volunteers at 10-30 agencies that work for free and lean in and lead forward to make our communities stronger. I salute you!

My writing has reached more people than ever. My blog has been viewed over 57,000 times by more than 37,000 leaders in dozens of countries. LinkedIn offered the opportunity to write posts, and my book, co-authored with Maureen Metcalf, Innovative Leadership Workbook for Nonprofit Executives has sold more books than ever. I couldn’t be happier and I am so grateful!

Thank you for joining me on my path! I hope we can continue to partner in 2016 to make our field stronger and our communities healthier.

3 (not so easy) Steps to Improved Board Engagement

The one thing nonprofit leaders have asked me the most about this year is board engagement. (Last year it was fund raising. Go figure.) It’s not enough to build a good board. We also have to engage that board. Great is not a mountain that once you scale it, you’re done. Nothing stays great without commitment. As we all know, there’s always another mountain.

A few years ago I wrote a piece on engaging the board. The information contained within is still true, and today I want to take a deeper dive.

When Boards set expectations, recruit for fit, experience and skill set, provide training to members about their role and then couple that with good board process, a robust committee structure with work assigned as per the agency’s needs and plan to move forward, board members are much more engaged. In the absence of that, the work isn’t aligned so board members sometimes don’t think we need them, know what to do, or understand their role. Here’s a post to illustrate one board member’s experience.

It’s one thing to know what engagement and disengagement look like. It’s another thing to know what to do to get from one to the other.

Step 1 Board Development Committee

The Board President appoints a standing Board Development Committee with a respected committee chair, usually a long standing board member and often the past President. Most by-laws (Code of Regulations in Ohio) have some version of this committee so it is unlikely you will have to revise yours to get this done. That committee may also be called nominating or governance.

If your CEO does not already have one, create a spreadsheet that lists each board member’s individual on-boarding date and prospective renewal date. Ditto for each Officer.

The Board Development Committee follows that schedule: they say “thank you for your service” at the end of the term when a member is not meeting the board’s expectations or asks for another term of service if they are. They honor the term limits for officers and, if you have term limits for board members, they uphold those as well.

Their committee members are always on the lookout for new Board prospects that meet the board’s needs. They know their needs because they have completed a board matrix that mapped the current board and showed opportunities and gaps by which to seek new board members. Board Source has a free matrix which you can download here.

The Board Development committee has a very specific chart of work. Please click here to see that work in detail.

Step 2 – Board Process and the Work of Committees

Good board process is critical for board member engagement. Good board process includes have an agenda for every meeting, and a strong Chair that follows that agenda. It also requires discussing and voting on the right things, which may require a training to ensure people are clear what the right things are. (Spoiler alert: it’s not day to day operations. Each Board member should be trained as to the role of the board.) It also includes votes being taken appropriately and captured in writing.

To see the details of several committees you are likely to have or need and their general charts of work in detail please click here. Your Board should decide the committee’s actual chart of work based on the needs of your organization and its aspirations. Of course that means you have to have discussed and decided upon your aspirations.

Once you do, it may be that you need to plan out the tasks individual board members will do to move the work forward. Each chart of work should be broken down by the assigned committee into assignments, metrics and due dates. Once it is, you can identify the steps to move the work forward. There are great project management tools out there to outline the steps and track the work. I encourage you to find or design one that works for you.

For example, if the Resource Development Committee aspires to increase contributed income, it may not be enough to bring a list of community philanthropists to a meeting and ask people to write their names next to the folks they know. You and your chair may have to lead a discussion as to how and why that is the plan, engage people around the plan, train people to execute the plan and – then and only then- go through the names one by one and set goals, make assignments and set completion dates.

Board meetings are held to accomplish the business of the board and to report out on the work of committees. That’s the price of admission. Yet to build engagement they should also include mission moments and strategic and generative discussions.

Step 3 Strategic and Generative Governance

“It is not enough to have a strategic plan that made your Board members crazy and now sits on a shelf. Strategy is not a one day thing. Strategy requires direction setting, questioning and the committing of resources to ensure the destination is reached. It also requires the rejection of things that are outside the scope of our plan, or the revision of our plan. It necessitates having a culture that allows for and encourages questioning, and sometimes dissent. Board meetings should include robust discussions.”

I want each and every board member to feel privileged to be in the room. I often do an exercise with Board members and ask them to write down on a piece of paper their opinion of board meetings on a scale from 1-4: 1 is I can’t believe I left my office for this. 4 is I feel privileged to be in the room. How would your Board members vote?

“We engage board members initially by talking to them about our organization’s mission, the impact it makes in our communities and our vision for changing our corner of the world. They joined our boards in order to help us do those things – and then we never talked with them ever again about any of it. Ever. Again.

We talk with board members about money, what we spent and why we need more of it; we talk with them about fund raising and why they need to do more of it; we talk with them about the problems we’re having and what we need from them to fix it.

We don’t talk with them nearly enough about what they want, about why they joined our board, and what they hoped to get out of their service.” Not Fund Raising? Not Engaged.

Board members join our boards to help us move forward our missions. We need to spend far more time at board meetings talking about the community issue that created the need for our agency, our values, how those values play out, how we are impacting our clients and what is happening in the world that is challenging our ability to meet our mission. We need to be diving deeper on the issues we care about and looking differently at how we are moving the needle for change.

I’ve said it before “if Boards are just going to approve the things put in front of them, anyone can do that. We don’t need our community’s best and brightest to serve on our Boards for that. We do need our community’s best and brightest to lead, to govern and to be strategic about the needs of our communities and generative about the issues we face.”

Boards that are developed, trained, focused on the right things and governing strategically and generatively are engaged, and engaged boards coupled with amazing leadership move mountains!

What’s been your experience in engaging a board? As always, I welcome your insight, feedback and experience. Please offer your ideas or suggestions for blog topics and consider hitting the follow button to enter your email. A rising tide raises all boats.

Revising your By-laws?

Boards of Directors should review – and consider if they need to revise – their organization’s by-laws (in Ohio called Code of Regulations) on a regular basis.

When was the last time you looked at yours? Go ahead; pull them out. I’ll wait.

You’re back? Good! Let’s begin.

Does your board meet as scheduled? Most by-laws state that boards will meet, at a minimum, quarterly. My understanding is it is fine if you meet more often. It’s not fine if you meet less often. (This would be a good time to remind you that I am not a lawyer.) If you are only meeting quarterly, I encourage you to meet more often. It’s like the nonprofit version of that old commercial- miss a meeting, you miss a lot.

Do you have the right number of board members? Most initial by-laws are written with three members, though three members are rarely enough to appropriately govern an agency. If your by-laws say three members, I encourage you to consider revising them. I like a range.

For more detailed information on the number of board members, the frequency of meetings or the structuring of by-laws, I encourage you to read How Many Board Members Meeting How Often and Creating a New Nonprofit.

I offer a few more questions for your consideration as related to your by-laws:

Are new members added as stated? Do you follow the process to elect officers and re-elect renewing members?

Do you have a process to remove board members?

Do the committees listed reflect the committees you have? Are those the committees you need?

Do you have dissolution and indemnification statements?

Do you have things in there that should be elsewhere? Conflicts of Interest policies usually stand alone. So do Financial Policies.

Which governance model do you follow? Is that in there? Does it need to be?

What title do your by-laws offer to both your executive leader and the president of the board? Are those the titles you use?

Titles have evolved during my career. It used to be that the senior executive was called the executive director and the leader of the board was called the president.

It is my understanding that the YMCA was the first large organization to challenge that notion. The YM, once upon a time, had branch directors who were expected to raise money in their communities but were having trouble getting in to see business leaders. They attributed it to their titles. As such, the Y changed the branch managers’ titles to be executive directors so that they were held in higher regard and could more easily get into higher-level offices. (I do not know if the YM has called their executive leaders President & CEO all along or if they changed their titles accordingly)

Once they made the change, and some other agencies followed suit, it became very difficult for everyone else to figure out who is an executive director, meaning the executive leader of the organization, or who is the executive director, meaning the senior staff of a branch, unit or facility.

Sometimes I can’t tell either. Once, while I was working with a board to help them select their new executive, I couldn’t figure out if an applicant, who had the title executive director, was actually the executive leader of her organization. I had to ask five different questions to figure it out. (She wasn’t, in case you were wondering.)

So what should you call your executive leader? There are still plenty of executive leaders called executive directors. There are, more than ever, especially in larger organizations, executive leaders that are called President & CEO. Up until recently, I never thought it was that big of a deal. It’s the same job, after all.

What changed my mind? A board I served was considering changing the name of our executive leader when we hosted an event in conjunction with three other agencies. Of the four executive leaders in the room, our executive was the only one with the title executive director. When each of the other leaders was introduced as President & CEO and she was introduced as Executive Director, it became very obvious that we need a title change.

If we as nonprofit leaders want to be taken seriously as the “real” leaders that we are, running “real” corporations, like we do, then we are more likely to be granted that respect when we have the same title, or a better title, as the person to whom we are speaking.

Of course once you change your executive leader’s title to be president you then have to change that the President of the Board’s title to be Chair and the Vice President to be Vice Chair.

They’re the same jobs, but as I’ve said before, any process, or in this case title, that is getting in the way of meeting your goal is a bad process. This one, luckily, is easily rectified, especially if you were revising your by-laws anyway.

A final word on by-laws: It is important that you follow your by-laws. Yet, the funny thing about by-laws is that there is no governing body that will be monitoring if you do. Of course, if you have significant quorum issues, those issues will end up reflected in your audit and any violation of the law is likely to end up in court or the newspaper. For the most part, outside of criminal activity, a civil violation or a hit on your audit, boards are on their own. As such it is important that boards police themselves. The easiest way to do that is to follow your by-laws, review them annually and revise them, as needed, which usually comes out to every 3-5 years.

It’s also critical – and much more difficult – to ensure that you are upholding your governance responsibilities; your executive is appropriately leading your organization, which is meeting its mission, providing excellent service and living its values.

All that starts with the board. And the board starts with its by-laws.

What’s been your experience in agencies following their by-laws? Do you have any funny, or appalling, stories to share? As always, I welcome your insight, feedback and experience. Please offer your ideas or suggestions for blog topics and consider hitting the follow button to enter your email. A rising tide raises all boats.

Hearing what your Board Members are Saying

The sun has finally come out in my corner of the world; I’ve been out and about more and meeting new people. Since all conversations with new people eventually come around to what people do for a living, invariably the topic rolls around to nonprofit boards.

Those conversations, for the most part, have not been positive. In fact, I keep coming up against instances where it seems like nobody is hearing, understanding or responding to what is being said. I’ve wondered repeatedly if we’re all communicating over or around each other.

When seeking to understand, I believe, we each have to think about not only what is being said but also what is behind what is being said. I’m starting to think I’m alone in that philosophy.

My first thought along these lines was a conversation I had with a board member who told me her board had voted to approve a recommendation without anyone in the room questioning the premise of the recommendation. Someone made a motion. It was seconded and unanimously approved. There was no conversation about community impact, resistance or obstacles to be overcome. No one introduced any opposition, or even any questions – fiduciary, strategic or generative. They all agreed that the decision was great, and no one paused to question if it was, in fact, great, or even viable. That, for me, is the definition of group think and why you should not drink the Kool-Aid at board meetings. For more information on both, please see the post Kool-Aid, Group Think and Generative Governance

I’ve also heard of two board members, on the same board, separately informing agency leadership they would not be serving another term. They both said some version of “this is not a good use of my time.” I wondered did the leadership understand that what those board members are saying is “This is a Yes board. We don’t have any strategic or generative conversations. All we do is approve things you either want to do or have already done.”

Then I wondered what did the leadership do with the information they received? Did they think about why it might feel like every meeting is the same? Or did they assume it was the problem of the board members who were leaving? I’m guessing it was the latter. It is much easier to ignore an issue staring you in the face if you can blame the other person, or in this case, persons. Yet, it is rarely so simple. Anytime you have two or more board members who do not renew their terms, it should give you pause.

Finally, I’ve heard of a board member considering not meeting his minimum giving requirement, because no one has asked him for his gift. He had been advocating for annual individual specific asks of each board member since joining the board. To add fuel to the fire, not only was there was no ask made, but there was a chastising at the board meeting of the board members who hadn’t yet given.

I’m not a fan of minimum gift requirements anyway, but for the agencies that have that requirement, it’s still appropriate to formally ask for the donation, especially to the people who have requested to be asked. You can’t always guess what people want, but you can certainly respond to (reasonable) donor requests. Board members who financially support your agency are donors too, and need to be cultivated and stewarded accordingly.

It happens all the time that board members quit – and also that donors stop giving – because the issue they have brought forth or the request they have made goes unaddressed, or worse, un-discussed. It’s one thing if you bring something up, it’s discussed and decided upon, and if you’re not in the room, someone gets back to you to explain why it can’t move forward. It’s a whole other thing if no one gets back to you at all.

I’ve been guilty of it myself. I’ve served and served on several boards, ranging in size from 12-24. There have been instances that board members suggested things I didn’t do, either because it didn’t make sense (to me), wasn’t realistic or wasn’t feasible. I had to learn to ask for more information or a better idea of how the idea might get implemented.

I, like every exec I know, was trying to keep multiple plates in the air and in an effort to not let any one of them fall, I may have neglected to consider, respond or follow up. Did I always communicate well? I’d like to think I did but it’s probably safe to say I didn’t always. Did I lose a board member because of it? I hope not.

I had to learn to ask for more information and to remember that the issue or idea people present is not always the issue at all. The issue is sometimes behind whatever it is that’s being said. It’s up to each of us to figure out what the topic really is and if it’s possible – or reasonable- to address it. Even in the cases where it’s not possible or reasonable, we have to get back to the person who suggested it.

I said we and not you intentionally. Sometimes board members come up with ideas that are not feasible and sometimes not ethical, or even legal. A response by another board member may be received better, which may have the added benefit of being safer for the exec.

I’m going to say (write?) that again: the exec does not always have to be the one to shoot down an idea. The important thing is that someone responds, not necessarily that you respond. While it’s true that any day can be the day you quit or get fired; today does not have to be that day.

Disengagement is one of our field’s largest issues and lack of responsiveness is one of our biggest hurdles. If we want people to take our field more seriously, we have to start hearing and responding to what they’re saying, and what ever’s behind what they’re saying. We have to understand their expectations, and exceed them!

Is anyone else having these conversations? Have you shared concerns or frustration with your leadership only to have them ignored? As always, I welcome your insight, feedback and experience. Please offer your ideas or suggestions for blog topics and consider hitting the follow button to enter your email. A rising tide raises all boats.

5 Things Non Profits can Strengthen in 2014

A new year is upon us. As I’m sure you are aware by now, I like to reflect back on things that have occurred and create a plan to avoid their reoccurrence.  As such, I’ve been thinking about things our field can do to be stronger.

1. Build Better Boards

You’ve seen me write it before and it’s still true, everything flows from the board. Weak boards hire weak leaders who manage weak agencies. Sometimes it goes the other way, weak boards hire strong leaders who do whatever they want because the board is asleep at the wheel. Neither contributes to effectively governed agencies.

Strong boards hire strong leaders who build strong agencies.

For more information on building strong boards, please see previous posts on board development.

2. Create Succession Plans

Agencies that have great leaders need to plan for that leader’s transition as much as agencies with weak leaders.  In fact, and among other things, one of the signs of a great leader is the strength of the agency once they’re gone.

Whether your exec gets fired, wins the lottery and moves to Jamaica, or retires after decades of excellent service, your board will need a plan to hire a new leader.

The Anne E. Casey Foundation’s Building Leaderful Organizations  and the Federal Reserve Bank of Kansas City’s Nonprofit Executive Succession Planning Toolkit, offer a comprehensive look at planning. Each may be much broader than you need, but both can help you figure out what you need.

3. Build Capacity

Most agencies and most leaders, even and especially the ones that are great, can continue to build their capacity. Whether you have experienced tremendous growth, have a new leader, have downsized and now want to rebuild or if you just want to increase your strength, capacity building is the way to go.

Some larger national organizations have proprietary capacity building tools. If you are a part of a national organization, ask if such a thing has been created. If it has, use it. If it hasn’t, suggest it.

For those of you who are standing alone, The Marguerite Casey Foundation’s Organizational Capacity Assessment tool is the best and most comprehensive I have seen. “It is a self-assessment instrument that helps nonprofits identify capacity strengths and challenges and establish capacity building goals.  It is primarily a diagnostic and learning tool” that was designed to help agencies serving low income communities.  Even if your agency has nothing to do with that community, this tool can help your agency be stronger.

4. Consider Mergers

There are lots and lots of organizations out there, some doing very similar work with very similar values.  If your agency is struggling, is strong or you have a leadership transition, it might be a good time for your board to consider merging with another organization. The decision may be no, but it is an option worth putting on the table.

Again, some larger national organizations have merger tools. If you are a part of a national organization, ask if such a thing has been created.  If it has, use it. If it hasn’t, suggest it.

For those of you who are standing alone, I encourage you to reach out to your local community foundation or local nonprofit resource center for assistance.  Here are a few links for your consideration:

Bridgespan’s Nonprofit M&A: More Than a Tool for Tough Times

Wilder Research’s What do we know about nonprofit mergers?

And from the Nonprofit Finance Fund, a report with the same title What do we know about nonprofit mergers?

The larger our field grows, the more we will compete for limited resources.  Can we be stronger together?

5. Get Better at Communicating with Donors

I am consistently surprised by the way some non profits communicate with their donors, or don’t, as the case may be. Here are some questions for you to assess your donor communication practices:

• Do donors receive a formal thank you note, on letterhead, that includes the amount of their gift within 48 hours of your receipt of their gift, regardless of the gift amount?
• Does it include the appropriate IRS language?
• Does someone call to say thank you to your largest donors?
• Does your Exec or a member of your board call those donors periodically to update them on the agency’s activities?
• Do you have a gift acceptance policy?
• Do you have a development plan?

If the answers is no to any of these questions, that is a great place to ramp up your practices.

For more information on resource development, please see previous development posts and Donor Dreams, for which I also blog.

The non profits in my community and communities across the country and the world are moving the needle on the issues they exist to impact.  With on-going assessment, the implementation of best practices and constantly striving to be better and do better we can continue to make our world better.

How do you think we can best strengthen our field?  As always, I welcome your insight, feedback and experience. Please share your ideas or suggestions for blog topics and consider hitting the follow button to enter your email. A rising tide raises all boats.

Board Work via Board Committees

Appointed or elected community leaders govern an organization. As outlined in my favorite Board book Governance as Leadership  and summarized in The Role of the Board, the Fiduciary Mode is where governance begins for all boards and ends for too many.  I encourage you to also explore the Strategic and Generative Modes of Governance, which will greatly improve your Board’s engagement, and also their enjoyment.

At a minimum, governance includes:

• Setting the Mission, Vision and Strategic Plan
• Hiring, Supporting and Evaluating the Executive Director
• Acting as the Fiduciary Responsible Agent
• Raising Money and
• Setting Policy

Committees are how the work of the Board gets done. Committees are critical to a well-functioning Board. In the absence of committees, Board meetings become de facto committee meetings which leads to long, meandering Board meetings that tend to disengage Board members. Board disengagement means less effective Boards that govern less effective agencies. Strong Boards beget strong organizations.

Introducing or enhancing your committee structure can be the difference between getting by and getting ahead. It solidifies and aligns the work, which ensures such work get accomplished.

The committees, their structure and definitions will be outlined in your organization’s by-laws, which in Ohio are called Code of Regulations. The by-laws will also dictate if committee chairs and committee members must be Board members. I recommend that the chairs be board members but that committee membership not be limited to only Board members. Committee work is a great way to build the bench of a Board, see how someone works and if they are a good fit for a future board position. Most organizations have a requirement that Board members serve on at least one committee.

Committee members are responsible to the full Board for the research, work, framing of the issues and recommendation in their assigned area.  There are a minimum of three committees I recommend as “must haves,” which are Board Development, Resource Development, and Finance Committee.

There is often also some version of an Executive Committee and there may be other committees as well. Let’s review each.

Executive Committee

The Executive Committee is usually the four Officers (President, Vice-President, Treasurer and Secretary of the Board) or the Officers plus the Committee Chairs.  Less often, Executive Committees have members at large.

Executive Committees can sometimes make decisions in lieu of the full board. This will be clearly stated in the by-laws. I generally recommend Boards only use this option in the case of emergencies. In fact, other than in emergency situations when I think they’re critical, I generally recommend against the Executive Committee meeting on a regular basis.

Powerful Executive Committees tend to disengage the remaining board members. It allows the few to operate without the whole. Anything that contributes to board member disengagement works against the agency’s success and should be avoided.

Finance Committee

The Finance Committee, chaired by Treasurer, works with the appropriate staff in examining the financial reports, understanding and monitoring the financial condition of the organization and preparing the annual budget. The Treasurer presents the monthly financial statements to the Board at each board meeting. This committee also selects an audit firm each year and reviews the audit plan, audit and 990, which should be signed by the Treasurer prior to submission.

As it is sometimes considered a conflict that the committee that monitors the books also manages the auditor selection, it is considered a best practice to have a separate audit committee.  If this is not feasible for your organization and as auditing firms are independent of the agency, this conflict can be mitigated by bidding out your audit and changing your auditor every few years.

Resource Development Committee

The Resource Development Committee works with the CEO, the senior development staff, if there is one, and the Board of Directors in developing strategies to identify and secure needed resources and funding to support the organization. The Committee is responsible for creating and executing a plan to raise money. The full Board is responsible for introducing their network to the organization, attending events, financially supporting the organization and encouraging others to do as well.

Board Development Committee

The Board Development Committee is concerned with identification of new Board members and the development of the future leadership of the Board. The Board Development Committee helps develop an effective Board through its two main functions:

Board Building:  A diverse board of directors (thought, skill, race, faith, ability, orientation, age, and gender) that is passionate about the mission of the organization is created through a Board Building process.

Board Education:  Board members will fully understand and effectively fulfill their commitments to the Board of Directors when a comprehensive orientation, continuing education, annual evaluation and recognition process is in place.

With the exception of a functioning Executive Committee, the Board Development Committee is usually the most powerful committee of the Board.  It is often the only committee that you can’t just volunteer for but must be invited to join and is the only committee I recommend be made up entirely of board members.

Other Committees

Some Boards also have program committee, human resource committees and a variety of other committees.

The Program Committee is responsible for the program side of the Board’s fiduciary responsibility. They focus on how the programs tie to the organization’s mission, what they impact, how that impact is measured and the number of people who are served in those programs.

The Human Resource Committee is responsible for the development and recommendation of the personnel and other relevant policies, the creation of a salary adjustment plan and the framework for the CEOs evaluation and succession.

A Word of Caution

I recommend caution when creating committees to do the work of staff. It gets very confusing as to who is responsible for what and responsible to whom. If Board members are acting in staff roles, the Executive Director retains the authority for decision making. If the Board members are operating within the scope of their roles, the Board has the authority for decision making. Conversations had in advance can help you avoid role confusion and the overstepping of boundaries.

Do you agree with my three “must have” committees?  What else do you recommend? What is your experience with committee work? As always, I welcome your insight, feedback and experience. Please share your ideas or suggestions for blog topics and consider hitting the follow button to enter your email. A rising tide raises all boats.