Dani Robbins

Posts Tagged ‘board of directors’

Generative Governance

In Leadership, Non Profit Boards on October 17, 2013 at 11:45 am

“Governance as Leadership,” by Richard P. Chait, William P. Ryan and Barbara E. Taylor, introduced a new paradigm for nonprofit boards. This paradigm is focused on three modes of governance with the third, the generative mode, quickly becoming the new model of choice to improve board process, board outcomes and board member engagement.

Those modes are as follows:

“Type 1- The fiduciary mode, where boards are concerned primarily with the stewardship of tangible assets.

Type 2- the strategic mode, where boards create a strategic partnership with management.

Type 3- the generative mode, where boards provide a less recognized but critical source of leadership for the organization.”

The fiduciary mode is where most boards function. It covers four of the five basic roles of board governance: setting policy, hiring the executive, raising money and acting as the fiduciary responsible agent. This is where the business of the board gets done. It’s not sexy, it may not even be fun, but it is critical.

The strategic mode includes the fifth role: setting the mission, vision and strategic direction for the organization. This is the role that decides or revises why the agency exists, where it’s going and how it’s going to get there. It’s a little sexier, and a lot more fun!

The governance mode is, or could be, the more fascinating piece in Board leadership. Most Board members serve to move forward the mission which is reflective of their passion. Yet, most Board meetings are focused on business not mission. Chait et al offers a way to make sure all board members are vested, engaged and participating in the work of the board AND the mission of the agency.

It’s not enough to suggest a new idea; we also have to show people how to implement that idea. Chait, Ryan and Taylor do just that and offer the following:

“Techniques for Generative Boards

  • Silent Starts- Set aside 2 minutes for each trustee to anonymously write on an index card the most important question relevant to the issue at hand.
  • One Minute Memos- At the end of discussions give each member 2-3 minutes to write down any thoughts or questions that were not expressed.
  • Future Perfect History- In breakout groups develop a narrative that explains in future perfect tense how the organization moved from its current state to an envisioned state.
  • Counter Points- Randomly designate 2-3 trustees to make the powerful counter arguments to initial recommendations.
  • Role Play- Ask a subset of the Board to assume the perspective of different constituent groups likely to be affected by the decision at hand.
  • Breakouts- Small groups counter group think and ask: Do we have the right questions? What values are at stake? How else might this issue be framed?
  • Simulations – Trustees can simulate some decisions – not to second guess- but to provoke discussion about the tradeoffs that management faces.
  • Surveys – The board can administer a survey anonymously prior to the discussion of a major issue. For instance: What should be atop the Boards agenda next year? What are we overlooking at the peril of our organization?”

If you’ve never been to a board meeting that operates in the generative mode, you are missing out! Some of my clients have split their agenda into three parts, one for each mode. Some have added strategic and generative questions at the end of each session. Some have extended the length of their meetings because their board was so interested in exploring the generative and strategic modes!

I’ve said it before: fiduciary is the price of admission to good governance, but it’s not enough; strategic and generative leadership is what engages Board members and moves the needle for change in our communities. Isn’t that why we serve?

How have you introduced generative governance? As always, I welcome your insight, feedback and experience. If you have other ideas or suggestions for blog topics, please share. A rising tide raises all boats.

Conflicts of Interest

In Leadership, Non Profit Boards on October 12, 2013 at 8:49 am

In the nonprofit world, and the rest of the world too, conflicts of interest are defined as anything that you control, influence, vote upon or have responsibility over that has the potential to personally benefit you, your company or your family. As you might imagine, Board of Directors have the opportunity to do just that on a somewhat regular basis.

There is a requirement for nonprofits to have a conflict of interest policy. Every agency must affirm each year the existence of such a policy or explain why it does not exist on their 990 (nonprofit tax form).  Each member of the board, annually, should sign a conflict of interest form affirming there are no conflicts or disclosing what may be a conflict.  Conflicts must be disclosed.

That’s right; I said disclosed. The requirement is that a policy exists, not that conflicts are not allowed to occur. The best policies include an official body that reviews each form and decides what to do about any reported conflicts.  It may be the Executive Committee or the Board Development Committee but some sub-group of Board members will decide if the disclosed conflict is in fact a conflict and if so, propose a recommendation to address the conflict.

Here are some examples and some circumstances when each might or might not be a conflict.  You may see a theme.

Conflict #1: The Chair of the Facility Committee is also a contractor and wants to bid on the building renovation.

If the Chair doesn’t own the company, is waiving their fee or donating back their compensation, it may not be a conflict.

If you bid out the work as per your policy and the contractor is the lowest bidder by a lot and you can prove that, it may not be a conflict.

If neither of the above is the case, it is absolutely a conflict.

Even when it’s not a conflict and you can defend why that is the case, it still may look like a conflict and, therefore, be perceived as one.  It may not be worth it for that alone.

Conflict #2: An office supply salesperson is on the board and wants the agency to purchase products from his company, for which he will get a fee.

If the items have been bid out – or depending on the price- at least compared against the same items being sold elsewhere and the board member’s company is offering the lowest price, the Committee may not deem it to be a conflict. Even in this case, I would encourage the Board member to donate the fee back to the agency.

If the above is the case AND if the board member will donate the fee back to the agency, it isn’t a conflict at all.

If you do not compare the items or if the items are not the most favorable price (to the agency) it is absolutely a conflict of interest, regardless of if the member donates back the fee.

Conflict #3: The husband of the Board Chair owns property that is being considered as a program site.

First let me take a moment to say, unless the property is being offered for free or for $1 per year, this should not happen at all, under any circumstances, ever. The Board Chair’s spouse renting, even at below market rate, space to the agency is a one way trip to the front page of the paper, an eventuality much easier avoided.

Even if you bid it out and even if it is the best rate for the best location and the best deal for the agency, you still shouldn’t do it. You will never have the opportunity to explain to all the people who will judge you for it and it’s just not worth it.  If you must have the property, ask the Chair to step down.

Perceived conflicts are just as dangerous as real ones. It doesn’t even matter if it’s real; if people think it’s real, it’s real to them and a problem for you.

I illustrate the above to make my point but most conflicts that will come up will be far more benign, though still potentially problematic.

When I served as an Exec, we had the owner of an HVAC company on the board and he sent his guys in to put up programmable thermostats.  I assumed they would be done pro-bono and was very concerned when I got a bill a few weeks later.  The Board member was incredibly gracious when I (nervously) called. He said it was a mistake and that we should have not been billed.  Phew!

What if it had gone the other way? I should have clarified prior to accepting the work being done. Since I didn’t, I would have had to go the Board President or designated committee and ask for a decision- and forgiveness.

So, you may be wondering by now, what if the Committee deems it is a conflict, what then?  The committee has to make a recommendation. There may be grand bargain devised but usually the decision is either that the purchase is not made or if it is made, that the Board member step down.

It’s not that agencies can’t do business with members of the Board, but I recommend you avoid it when at all possible. I have a few leadership rules I live by; the one that applies to this situation- and many others is – conflict avoidance is easier than damage control.

If you must do business with a Board member, document why. Bid it out and be able to able to and prepared to prove to your community why you elected to entertain a conflict of interest.  It will be easy if the Board member’s company is the lowest bid, with the most comprehensive offer and the best reputation.  It will be much harder if it isn’t.

What have you done to manage conflicts of interest?  As always, I welcome your insight, feedback and experience.  If you have other ideas or suggestions for blog topics, please share. A rising tide raises all boats.

Ps. I’m delighted to announce that, in addition to my current role as consultant and blogger, I have joined answers.com as their nonprofit expert. Please let me know if you have any suggestion for articles.

I’m Moving on Up; You’re Moving on Out! Or How to Remove a Board Member

In Leadership, Non Profit Boards on September 24, 2013 at 4:42 pm

I’m moving on up; you’re moving on out is the chorus of an old song I’ve always loved and I try to have a bit of fun with this blog, so … let’s talk about removing Board members.

All leaders have a shelf life. Bad leaders have a shorter shelf life. It is easier to avoid putting a potentially bad board member on the board than to remove an actually bad one, but that is a luxury you may not have. Some time, some day, somewhere in some volunteer Board position, you will have to remove a Board member. If you plan to spend your life in service to your community, the question isn’t if but when and once that time comes, how?

All Board terms eventually come to an end. The easiest way to remove a Board member is to not renew their term. Most terms are 2-3 years. (This is assuming you are following your by-laws and actually considering when terms expire and if members should be renewed. If you are not, that is an excellent place to start ramping up your Board practices.) If the Board member to be removed isn’t violating any ethics, policies or laws, it may be worth your while to wait them out or ask them to resign. Then again, it may not.

Board members are removed as outlined in your by-laws (in Ohio called Code of Regulations), which like any official document provides only the process, without the kindness.

Before it comes to that, I recommend you ask for a resignation. Obviously, it’s easier for someone to resign than for the Board to have to take formal action to remove them. Allowing for a resignation greatly increases your chances of being able to continue to count on the person as an ambassador, donor and friend, and it also mitigates the damage control you may have to do later.

How to get them to resign?

I always joke that the easiest way to get someone to resign is to ask them for $10,000. I used to have a Board member who never came to meetings but loved to call me with last minute grants requests that he insisted we write to his company for funds we never received. When we initiated our capital campaign and set our (very large and later achieved) Board goal, we called to set up the meeting to ask for his gift. He resigned on the spot. I joke but it’s a joke grounded in experience.

When you change the way business gets done in an organization, people may no longer be interested in serving that organization. That’s okay. There may also be people who had the best intentions when they joined your Board but either didn’t understand the scope of the role, or are no longer able to fulfill the role. That’s okay too. Then, there are people who are bad Board members, either because they are disengaged, distressed or just flat out disreputable. In all cases, it is our job to protect the organization and provide a gracious exit.

Some options for your consideration:

The hinting around option: Have the Board Chair (not the CEO) call the member and suggest that they seem less engaged lately and ask if they can continue to serve. Depending on how the conversation goes, you should either get a firmer commitment for service or the request to step down or away.

The direct option: Have the Board Chair explain the situation, the impact of the member’s inaction and ask for their resignation.

There is no shame in resigning. There is shame in not fulfilling your obligations (though you might not want to say that).

If the person is violating ethics, policies or laws, you have an obligation to remove them. Your by-laws will lay out how that process should be done and under what circumstances. Some by-laws require the calling of a meeting for that purpose. Some by-laws require different standards if the removal is for cause or without cause. The difference is often simple majority vs. 2/3 majority. Your by-laws spell out how Board members are to be removed. It’s usually at the beginning, around the 2nd or 3rd page.

Even if the removal is for cause, if appropriate, it might still be worth a call asking for the resignation. Most people, even those who are violating our standards, will resign when given the chance.

There will be some cases when it will not be appropriate to ask for a resignation and the Board will have to take action. As with any termination, consider what of the organization’s property or access the Board member may have, including banking, documents and also money. (This is a good place to remind everyone that checks and balances can avoid some of these issues and that most organizational documents should be kept in the organization’s office when at all possible.) Of course, unless you get the materials back before you initiate action or involve the police, whatever you fear is likely to materialize once you formally remove them from office.

Back to the title, when you remove a Board member, unless it’s an Officer- and let’s hope it’s not (if it is the above will still apply) – there isn’t usually an “up” in which to move. Even so, leadership abhors a vacuum and assuming the Board member being removed is the destructive kind rather than the disengaged kind, the remaining leaders will have to assess the circumstances that allowed destructive on the board in the first place. Feedback loops are critical to learning. Life and leadership is about making new mistakes.

The removal of a volunteer leader is less likely to be needed when Board members are screened, selected, oriented and developed appropriately, but good planning isn’t a guarantee; sometimes we get it wrong.

The work of the organization is too essential to get bogged down with bad decisions or bad leaders. Good Boards make tough decisions. The important thing is to address the issue, rather than compound the problem.

What have you done to remove Board members? As always, I welcome your insight, feedback and experience. If you have other ideas or suggestions for blog topics, please share. A rising tide raises all boats.

Board Meetings Gone Wrong

In Leadership, Non Profit Boards on August 16, 2013 at 6:34 am

Boards meetings can quickly go from productive to destructive in any number of ways.  Here’s a few:

The morning after is too late

I cannot tell you the number of times in my career that a Board member has called me the morning after a board meeting appalled by something the Board voted to approve the night before, at a meeting they themselves attended.  I can absolutely tell you the number of times those very same Board members have voiced their objections in the room: zero!

The next morning is too late.  If you do not like the motion that is on the table, it is not only your right to object out loud and on the record, it’s your obligation.

Sometimes individual Board members come up with wacky (read: dangerous) ideas.  When those ideas become motions that get seconded is when they go from wacky to possible.  Motions that have no second die, and so do the ideas that spawned them.

Motions that are seconded prompt the chair to call for a discussion and a vote.  If you are uncomfortable with the motion that is on the table, I implore you to speak.  Silence is acquiesce.  It is usually too late (and much harder) to address something after a vote has been concluded.

When you don’t know where you’re going any road will get you there.

No written agenda or an agenda that isn’t followed practically guarantees a long, meandering meeting that will only serve to frustrate those in the room, but won’t accomplish much beyond that.  It’s also likely that such a meeting will not produce formal votes or minutes that capture the work the Board has accomplished – or not as the case is (more) likely to be.

No Strategic Plan works the same way.  In the absence of a plan, you will have a lot of people working on a lot of things that may or may not align because the Board has not articulated and voted upon a formal direction.

If everyone’s in charge, no one’s in charge.

Boards elect Chairs to be in charge (of the Board). It’s awkward and feels weird the first time you chair a meeting, but the weirdness will pass when you begin to lead.  However, not leading guarantees the weirdness moves in and sets up shop.

It’s the forth Tuesday at 4; let’s meet!

Don’t have a Board meeting if you have nothing to talk about.  If there are no committee reports to give and no business for the Board to address, cancel the meeting.

At the end of the day, there’s no accounting for crazy

The easiest way to avoid crazy in the board room is to not let crazy on the board.  A Board Development plan and a formal process to elect board members will weed out inappropriate board prospects, before they become inappropriate board members.

Time of Death: 2 hours after we started talking about this

Discussion that seems to be spiraling can be stopped by two of my favorite phrases:

1. “Let’s call the question” which in Board speak means enough talking, let’s vote.

2. “Let’s send this back to committee.”  This phrase, when used by the chair, is a declarative statement that the board meeting has devolved into a committee meeting.  When used by anyone other than the chair, it is a prompt to the chair that the discussion has gone on too long.  In either case, there should be a vote, reflected in minutes, that the motion was tabled pending the committee’s review and consideration of the issues raised.

What’s the Executive Director’s role?

Good Execs do their homework before the meeting and usually know how people are going to vote before the meeting begins……which doesn’t ensure they will do so.

If a meeting goes off track, Execs can:

  • stall by whispering the potential negative impact to the Chair and hoping they agree;
  • offer to get more information and bring it back to the board at a future meeting; or
  • recommend the motion be sent back to committee prior to being voted upon.

If you have to, you can object out loud and on the record but be aware that doing so may spend significant political capitalIt also may not help, which does not mean you should not do it.

As mentioned in Hiring, Supporting and Evaluating the Executive, “worrying about keeping your job precludes you from doing your job. You have to do what you believe is best, based on your experience, information and training, within the boundaries of your role and the law. We all know that any day could be the day you quit or get fired. That can’t stop you from leading.”

What’s been your experience?  Have you seen Board meetings go off track?  What has gotten them back on track?  As always, I welcome your insight and experience.

Governance: The Work of the Board, part 5 Setting the Mission, Vision and Strategic Direction

In Non Profit Boards, Strategic Plans on August 10, 2013 at 8:17 am

Welcome to the final post in our five part series on Governance.  We have already discussed the Board’s role in Hiring, Supporting and Evaluating the Executive,  Acting as the Fiduciary Responsible Agent, Setting Policy, and Raising Money.  Today, let’s discuss the Board’s role in setting the mission, vision and strategic direction.

As previously mentioned, Boards are made up of appointed community leaders who are collectively responsible for governing 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:

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

One of my goals for this blog is to rectify the common practice in the field of people telling nonprofit executives and boards how things should be done without any instruction as to what that actually means or how to accomplish it.

What Board members being responsible for setting the mission, vision and strategic direction means is:

The Board sets – meaning discusses and votes to adopt or revise – the mission statement, which answers why your organizations exist.

The Board also sets the vision of the organization. A vision statement is a description of what the organization will look like at a specified time, usually 3-5 years, in the future. There are two minds in the field as to if a vision statements should be a utopian view such as “an end to hunger” or a more concrete view such as “to be the premier youth development organization.”  I lean toward the latter; I find it challenging to set goals to get to utopia.

The Board sets the Organization’s Values. These are ideas that are valued by the staff and Board of an organization. That could be communication, collaboration or individual accomplishments (not usually both), honesty, high ethical standards, or a whole host of other things. Values are about how you conduct yourself;  how you talk to and about your clients, students or staff.  Values provide the framework for decision making.

The Board votes upon the strategic plan, after participating in a strategic planning process “in which the board, staff, and select constituents decide the future direction of an organization and allocate resources, including people, to ensure that target goals are reached. Having a board-approved, staff-involved strategic plan that sets organizational values, includes effective measurements and the allocation of resources aligns the organization, provides direction to all levels of staff and board, and defines the path for the future of the organization. It also allows leadership, both board and staff, to reject divergent paths that will not lead to the organization’s intended destination.” (Innovative Leadership Workbook for Nonprofit Executives)

The process – and the document – can be very long or very short.  In fact, I have a new theory that the longer strategic plan is, the less likely it is to be used.  For my clients, I recommend a 4-5 meeting process: We start with setting or revising values, vision and mission and end with assignments, measurements and due dates.

Please do not accept a plan that does not include assignments, measurements and due dates.  If you cannot answer the question “How will we know when we get there?” you will not get there.  A plan without each of three is just a list of goals that are unlikely to be accomplished.  For information on what else should be included in the process, please click here.

A strategic plan should be a living document that guides the organization and provides a point for ongoing programmatic and organizational evaluation.  It should not sit on a shelf.

All organizations should have a strategic plan.  Strategic plans get everyone on same page as to where you are as an organization and where you are going.  They allow the group to decide the goals moving forward; create measurements to determine if you met your goals and assign responsibility and due dates for specific goals.   It is a process that results in not only a document but also a shared understanding among key stakeholders.

In the absence of that shared understanding and agreement, there are still moving parts, but they’re not aligned. The absence of a plan sets the stage for people to do what they feel is best, sometimes without enough information, which may or may not be right for the organization.  It opens the door for one person’s vision to get implemented and others to feel unheard or unengaged.  The absence of a plan allows for major decisions to be made on the fly and for potentially mission driven decisions to be compromised.  As we all know, movement goes in other directions than forward.

What do you think?  As always, I welcome your insight and experience.

Governance: The Work of the Board, part 4 Raising Money

In Non Profit Boards on August 9, 2013 at 7:40 am

Welcome to part four of our five part series on Governance.  We have already discussed the Board’s role in Hiring, Supporting and Evaluating the Executive,  Acting as the Fiduciary Responsible Agent, and Setting Policy.  Today, let’s discuss the Board’s role in raising money.

As previously mentioned, Boards are made up of appointed community leaders who are collectively responsible for governing 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

One of my goals for this blog is to rectify the common practice in the field of people telling nonprofit executives and boards how things should be done without any instruction as to what that actually means or how to accomplish it.

What Board members being responsible for raising money means is:

The Board sets the fund raising (also called resource development) goal; embarks on the campaign; opens doors; introduces staff; “makes the ask” when they’re the most likely person to get a yes (regardless of title or ranking, you always send the person who is most likely to get a yes to a gift request); picks up the tab for lunch when possible; and thanks the donor.  The Board is also responsible for setting the strategic plan which may include a goal to increase contributed income. Each Board member should be expected to make a significant gift, reflective of their personal circumstances, as well as raise additional money.

I do not recommend give or get policies. Give or get policies allow Board members to avoid personally giving; 100% Board giving is critical for a successful campaign.  Potential donors will ask if there is 100% Board giving and the answer must be yes.  Why should anyone else support an organization whose Board members do not? Moreover, how can you ask for someone else to financially support an organization you do not financially support?  I can hear someone out there saying “I give of my time,” and that is wonderful, but it’s not enough.  Board members should also financially support the organizations they serve.

I also don’t recommend set giving requirements. Set giving policies, intended to be minimum gifts, actually end up being the entire gift.  Such policies alienate potential board members who may bring a lot to the table but cannot personally give at the set level.  It also leaves money on the table for people that can give more.  Finally, it eliminates the Resource Development Committee’s opportunity to seek out and personally go to ask each Board member for a specific (to their circumstances and level of engagement) gift.  It takes away the chance to say thank you for your engagement, removes the possibility to steward Board members as donors and minimizes the chance of a larger gift. Any policy that works against your goals is not a good policy.

The Board cannot and is not expected to raise money alone. 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 case statement (also called case for support) and a letter asking for a specific dollar amount; attending the ask meetings as appropriate; documenting the meeting in the database; writing the formal thank you note; and creating a plan to steward (or circle back to) the donor going forward.

The Executive 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 to increase contributed income.

What’s been your experience?  As always, I welcome your insight and experience.

Governance: The Work of the Board, part 3 Setting Policy

In Non Profit Boards on August 2, 2013 at 7:40 am

Welcome to part three of our five part series on Governance.  We have already discussed the Board’s role in Hiring, Supporting and Evaluating the Executive and Acting as the Fiduciary Responsible Agent.  Today, let’s discuss the Board’s role in setting policy.

As previously mentioned, Boards are made up of appointed community leaders who are collectively responsible for governing 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
  • Setting Policy and
  • Raising Money

One of my goals for this blog is to rectify the common practice in the field of people telling nonprofit executives and boards how things should be done without any instruction as to what that actually means or how to accomplish it.

What setting policy means is:

The board discusses and votes to approve (or not) all policies and plans.  Policies are usually recommended by (and often written by) the CEO, also called the Executive Director.  Plans are usually drafted by committee. Both must be approved by the Board.

Procedures, on the other hand, are set by the CEO, often in consultation with the staff. The difference is the difference between the rules and the law.  You can get fired for violating a policy (law), but not usually a procedure (rule).

Policies, plans, and procedures set the boundaries for people to act.

I recommend organizations have the following policies:

  • Personnel
  • Financial
  • Crisis Management and Communication
  • Conflict of Interest
  • Confidentiality
  • Whistle Blowing/Ethics

Policies dictate what happens in a defined set of circumstances.  I occasionally get calls from people who want to create a policy they don’t really need because they are trying to avoid addressing an issue directly.  Do not create a policy to avoid having a conversation.  Have the conversation, and then decide if you need a policy.

That said there are policies you definitely need.  For example (and among other things), the personnel policy determines what benefits staff get; the financial policy sets who can sign checks and for what amount; the crisis communication policy determines who speaks for the organization; the crisis management plan dictates what to do if there is an intruder; the conflict of interest policy states how conflicts are managed; the confidentially policy requires a process to protect information; and a whistle blower policy provides a path to report violations.

A reporter sticking a camera in the face of your most disengaged staff member is not the time to decide who speaks for your organization.  Having a crisis communication policy will make all the difference in your organization’s ability to continue to provide services after a crisis, and the community’s ability to be confident in your ability to do so. The absence of a single point of contact allows for a variety of messages from a multitude of people – who may or may not be affiliated with your organization – to be shared with the community, which at a best will dilute your ability to control the story and at worst will open the door to a new set of issues for people to judge you by. As all of our moms taught us, a reputation takes a lifetime to build and just a few minutes to destroy.

Policies address today.  Plans take you into the future.

I recommend organizations have the following plans:

  • Board Development
  • Marketing
  • Resource Development
  • Strategic Plan
  • Succession Plan

Plans determine what path you will follow in what circumstances.   For example (and among other things), a Board Development plan dictates what process will be followed to bring on new Board members; a marketing plan determines what materials you will create and how they will be disseminated; a resource development plan lays out how you will raise contributed income; a strategic plan states where you are going as an organization and how you plan to get there; and a succession plan ensures continuity by outlining how leadership will be perpetuated.

Plans, policies and procedures can address or eliminate many of the issues that come up on a day to day basis that distract from your mission and moving the needle for your community.

What’s been your experience?  As always, I welcome your insight and experience.

Governance: The Work of the Board, part 2 Acting as the Fiduciary Responsible Agent

In Non Profit Boards on July 20, 2013 at 7:18 am

Welcome to part two of our five part series on Governance.  The first post reviewed the Board’s role in Hiring, Supporting and Evaluating the Executive.   Today, let’s discuss the Board’s role as the fiduciary responsible agent, which is quite different than the fiduciary mode outlined in my favorite Board book Governance as Leadership  and summarized in The Role of the Board. Fiduciary responsibility is one of the 5 pieces of the fiduciary mode, which is where governance begins for all boards and ends for too many.

As previously mentioned, Boards are made up of appointed community leaders who are collectively responsible for governing an organization.  That includes:

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

One of my goals for this blog is to rectify the common practice in the field of people telling nonprofit executives and boards how things should be done without any instruction as to what that actually means or how to accomplish it.

What it means to meet your fiduciary responsibility is:

It is the Board’s role to:

  • — Read, understand and approve the financials
  • — Review, understand and approve the audit, as appropriate
  • — Review and sign the 990
  • — Understand how the programs tie to the mission and the number of people served in those programs as well as the program’s impact

Financial statements should be prepared by the assigned staff or volunteer and reviewed by Finance Committee, often Chaired by the Treasurer, and then presented, by that Treasurer, to the full Board every time the full Board meets. Members of the Board should receive and review the information in advance and come to meetings prepared to ask questions and continue to ask questions until they understand and are willing to have their name listed as having approved the financials.  Once questions have been answered and all members are satisfied, the financial statements should be voted upon and either approved or sent back to committee with instructions to be addressed.

Please do not vote for something you do not understand.  When I do this training with Boards, I often say, the Exec will just get fired; Board members will go to jail.  I’m only mostly kidding. The Exec will likely go to jail too.  Either way, the community and the law will hold you as a Board member responsible.

The audit is prepared by an independent accounting firm in an effort to assess if the organization is operating in accordance with Generally Accepted Accounting Principles (GAAP) and also within their commitments.  Different audits are required based on the amount of government funding that is received. The costs of such audits vary depending on the budget size, revenue streams, and also the quality of the financial systems and the need to for the auditor to clean up those systems. Audits should be bid out, in conjunction with organizational policy, every few years.  The auditor that is selected should conduct the audit and also come to the Board meeting to present their findings and answers any questions that Board members may have.  Auditors also prepare and should explain a management letter which includes suggestions on improvements that could be made.  Such letters didn’t used to be but are now regularly requested by funders so it is imperative the Board is aware of what’s included within and have discussed the ramifications of accepting, and also not accepting the recommendations.

Most agencies pay for an audit to be done every year; some less often but still on a specific schedule driven by policy. The audit is submitted with most grant requests, to the national office of most affiliated organizations, as applicable and is given out frequently to anyone who requests a copy. Some organizations post a copy on their website.

The firm that prepares the audit is usually also the firm that prepares the 990, which is the tax return that non profits file each year. The 990 should be reviewed by the Board, prior to being submitted, and should be signed by the Treasurer.  It is often signed by the CEO, but it should be signed by the Treasurer or another member of the Executive Committee.

Finally, as part of meeting their fiduciary responsibility, the Board should understand how the programs tie to the mission, the number of people served in those programs as well as the  impact of that program.  That does not mean the Board needs to be – or even should be- in the weeds of programming.  It is the CEO’s responsibility to ensure the program’s creation, implementation, management and evaluation.  It is the Board’s responsibility to understand how such programs are aligned with the mission and the vision of the organization, the impact of that program on the clients your serve as well as the number of people served by those programs.

Fiduciary responsibility means that the Board – and not just the Treasurer but the whole Board- is responsible for safeguarding the community’s resources and ensuring accountability and transparency.

What’s been your experience?  As always, I welcome your insight and experience.

Governance: The Work of the Board, part 1 Hiring, Supporting and Evaluating the Executive

In Non Profit Boards on July 10, 2013 at 3:48 pm

As mentioned in Board Basics and reposted in Erik Anderson’s Donor Dreams blog “Boards are made up of appointed community leaders who are collectively responsible for governing an organization. That includes:

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

As you know, one of my goals for this blog is to rectify the common practice in the field of people telling nonprofit executives and boards how things should be done without any instruction as to what that actually means or how to accomplish it.

Since I wrote a recent post on Strategic Planning, I’m going to circle back to that one and start with Hiring, Supporting and Evaluating the Executive Director.

What that means is:

It is the Board’s role to hire the Executive Director, also called CEO. Prior to hiring, interviewing or even posting the job, it is imperative the Board discus what they want and need in an Executive Director. This conversation cannot be farmed out to a committee primarily consisting of non board members, or to a consultant or hiring firm. That will only get you what they want and think you need – not what you want and actually need.

What skill sets and experience do you need in a leader?

Growing, turning around or maintaining an organization require very different skill sets. Which trait do you want your new leader to have? Does your leader need to be a subject matter expert? Does she need to be local? Does he need to be a fund raiser, an operations person or both? I recommend a search, regardless of if there is a good internal person, if someone on the board wants the job or if there is an obvious heir apparent. Do a search, let everyone apply and see who best matches your needs. For more information on conducting a search, please click here.

Once your hire an Executive Director, he needs to be supported. Supporting an Executive Director is where the rubber meets the road. I once had a colleague tell her board to “Support her or fire her, but to choose.” and while I was shocked, I was also in agreement. The job of the Executive Director is very difficult and energy spent on worrying is not spent on moving the organization forward. (To the Executive Director’s out there: Worrying about keeping your job precludes you from doing your job. You have to do what you believe is best, based on your experience, information and training, within the boundaries of your role and the law. We all know that any day could be the day you quit or get fired. That can’t stop you from leading.) Communication is key: the Board needs to know (and approve of) what the Executive Director is doing and the Executive Director needs to know (and be willing to do) what the Board wants.

It is the Board Chair’s job to be the direct supervisor of the Executive Director and the entire Board’s job to support her, set goals and hold her accountable to those goals. That means the Board has to let the Executive Director fulfill the bounds of her role. There should also be a strategic plan that is being implemented, board approved policies that are being followed and an annual evaluation process for the Executive Director (and the rest of the staff).

The vast majority of Executive Directors rarely get evaluated, and when they do it’s often because they asked for an evaluation. (To the Board Presidents out there: Executive Directors, just like Board members and most other people, when left to their own devices will do what they think is right. What they think is right will not necessarily be aligned with what the Board wants, especially if what the Board wants has not been discussed or communicated. It also may not be aligned with anything anyone else is doing. See the Strategic Plan link above to create alignment.) Executive Directors should be given expectations and goals (just like all other staff) and should be evaluated against those expectations and goals every year. There should be a staff (including executive) compensation plan that has a range for salaries for each position and reflect comparable positions in your community; raises should be given within the confines of that plan, or the plan should be revised. (More on that in the Setting Policies blog to come.)

Hiring, Supporting and Evaluating the Executive Director has to happen – in full- for your executive to be an effective leader, for your board to fulfill its responsibilities and for your organization to fulfill its mission. When an Executive Director is hired right, supported appropriately and evaluated effectively there’s no end to the impact it can make on an organization and a community.

What’s been your experience? As always, I welcome your insight and experience.

Strategic Planning

In Leadership, Non Profit Boards, Strategic Plans on May 30, 2013 at 3:55 pm

“Strategic planning is a process in which the board, staff, and select constituents decide the future direction of an organization and allocate resources, including people, to ensure that target goals are reached. Having a board-approved, staff-involved strategic plan that includes effective measurements and the allocation of resources aligns the organization, provides direction to all levels of staff and board, and defines the path for the future of the organization. It also allows leadership, both board and staff, to reject divergent paths that will not lead to the organization’s intended destination.” (Innovative Leadership Workbook for Nonprofit Executives)

All organizations should have a strategic plan.  Strategic plans get everyone on same page as to where you are as an organization and where you are going.  They allow the group to decide the goals moving forward; create measurements to determine if you met your goals and assign responsibility and due dates for specific goals.

In the absence of a plan, there are still moving parts, but they’re not aligned. The absence of a plan sets the stage for people to do what they feel is best, sometimes without enough information, which may or may not be right for the organization.  It opens the door for one person’s vision to get implemented and others to feel unheard or unengaged.  The absence of a plan allows for major decisions to be made on the fly and for potentially mission driven decisions to be compromised.  As we all know, movement goes in other directions than forward.

Strategic Planning is a process that results in not only a document but also a shared understanding among key stakeholders.  The process – and the document – can be very long or very short.  (I have a new theory that the longer strategic plan is, the less likely it is to be used.)  It doesn’t have to be a huge, multi-level process that includes benchmarking and a community needs assessment, but it can be if you have the inclination and the resources. For some organizations, primarily larger ones or those just starting out, a community needs assessment may be critical.  I don’t generally recommend them for established social services agencies.  Most social service agencies are pretty clear on the need and there is ample documentation to support their assessment.  In those cases, an environmental scan, coupled with an issue exercise and/or a SWOT analysis may be sufficient.

Regardless of if you select to do benchmarking and have a needs assessment or not, Strategic Planning should include:

  1. Values, Mission and Vision setting or recommitment

I always start with values as I believe they set the tone for everything that follows.  What are your organizational values?  What words reflect the way your organization operates, and the way your team talks to and about your clients?  What words infuse and reflect your organizational culture?

The mission statement answers why your organizations exist.

A vision is a description of what the organization will look like at a specified time in the future. There are two minds in the field as to if a vision statements should be a utopian view such as “an end to hunger” or a more concrete view such as “to be the premier youth development organization.”  I lean toward the latter; I find it challenging to set goals to get to utopia

History of the organization, its footprint and current services, an environmental scan and additional information, as necessary

Planning should include some discussion of critical information regarding program and operations, organizational challenges, community landscape, technology, finances, budget, both human resource and resource development capacities and systems, and the processes and development of the Board of Directors.

Set Goals to meet the Vision

Discuss what has to happen to get you where you want to go.  What do you need to add, subtract or change to get there?  What has to happen to reach your goals?

Set Strategies to meet Goals

Strategies answer how we will get where we want to go – to close the gap between the current reality and our vision.  Strategies are broad-based statements that define the path for the organization (rather than the ongoing work of the organization).

Develop Goals into Work Plans with assignments and due dates

Create a plan to meet those goals by including who will do the work and by when.

Once the strategic plan is complete, create a reporting mechanism and discussion opportunities at future board meetings. Strategic planning is one of the 5 components of Board Governance. Board members should participate in the process and vote on the outcome.

The Board should also assign who will ensure the plan’s success. The options, in order of effectiveness, are the Strategic Planning Committee Chair, Board President, another board member or the Executive Director.  Executive Directors are traditionally tasked with implementing and stewarding the plan (and being evaluated as such) but they can’t always do it alone; it is helpful to have a board member also ensuring the plan’s implementation.

There are as many types of plan strategies, variations on those strategies and ranges of fees, as there are consultants offering the service.  You don’t have to hire a consultant, but I do recommend you have an outside objective facilitator to help you.

A strategic plan should be a living document that guides the organization and provides a point for ongoing programmatic and organizational evaluation.  It should not sit on a shelf.

What do you think?   As always, I welcome your experience and insight.

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