Dani Robbins

Posts Tagged ‘fiduciary responsibility’

For My Executive Director Friends: Three More Things to Stop Doing

In Leadership, Non Profit Boards, Organizational Development on October 11, 2015 at 10:53 am

As I mentioned in my original post, the fascinating thing about being a consultant and people paying you to make recommendations is that they generally listen to your suggestions. They don’t always implement them but they at least consider them. Friends, on the other hand, call when they’re trying to figure things out, but do they listen? Not so much!

As such, for my many friends who serve in executive leadership roles in nonprofits, here are a few more things that you should stop doing. I hope that in doing so you will find the role more rewarding and also less frustrating.

  1. Postponing your own paycheck

Just to be crystal clear, I’m not talking about unpaid executive directors. I’m talking about executive directors who usually get paid but are not paying themselves this week (or possibly this month or this quarter). I totally understand how it seems reasonable to you to pay your team but not pay yourself. I get that there isn’t enough money in the bank. I get that it’s a cash flow issue. I get that it feels like the right thing to do, but it’s not.

I have been in the room when Board members are told that their execs have made this choice and they are, for the most part, not generally amused. They do not feel it’s honorable. They do not feel it’s noble. They think it’s nuts, dangerous for the agency and a liability for them. And they’re right.

If you truly do not have the cash to pay yourself, work with your Board to come up with a plan. Do not make the decision on your own to forgo your own paycheck in the hopes of saving your agency. It’s not fair or reasonable for your family. It’s outside the bounds of the labor laws. It’s also not your decision to make.

This is an issue to take to your Board. Don’t spring it on them at the last minute. And do not feel like it’s all on you. Nonprofits are run on a shared leadership model. Share the information and work with your Board to come up with a solution.

  1. Personally guarantee anything

You should not personally guarantee a loan for your agency. You should not personally secure an agency credit card, a line of credit or put anything you own up as collateral. You lead but do not own your agency.

This is not your company. Even if it was, companies put systems in place to protect their owners. This is your baby and it is your responsibility but not yours alone. You report to a Board and that Board can – and likely will -make a decision with which you don’t agree. You could quit or get fired tomorrow. If either of those eventualities occur, you will be still be liable for whatever you personally guaranteed.

Don’t do it. Work with your Board and your lending institution to find a solution to secure the resources you need.

  1. Owning the Work of the Board

If you are frustrated with your board, the answer may be looking back at you in the mirror. If they aren’t doing what you want, it may be because you’re doing it. Stop.

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. Yes, I can hear you yelling at me through your computer but it’s still true.

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, dates 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, and offer recommendations, 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.

The CEO role is gratifying and it’s inspiring. It’s also hard and it’s lonely. Sometimes we make it harder than it needs to be. Stopping the above practices can make your difficult job not only a little less difficult, but also a little more rewarding.

What advice do you give your friends in leadership roles? What else would you add to my list? 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.

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The Trifecta Triangle: Ethics, Values and Integrity in Nonprofits

In Leadership, Non Profit Boards, Resource Development on March 19, 2014 at 10:34 am

I just read a great post called How Did they Get my Name? about agencies selling donor information. It got me thinking about ethics in our field and also the differences between words we often use interchangeably. Those words are ethics, integrity and values.

Values, when used in the field, primarily refer to organizational values. I usually explain them as the 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. Organizational values are not necessarily things you’d include when listing your personal values, though of course they might be. This is not to say that your personal values do not need to be aligned with your organization’s values, because they do. It is intended to mean that we all might not list the same things that our organizational values include.

Integrity in our field – and everywhere else – means doing what you say you’re going to do.

Ethics is a moral code of conduct or principles by which you make decisions, which should also be made in concert with your values.

Anytime you’re talking about ethics, you’re also to talking about values and integrity. They are the 3 sides of a nonprofit’s top three triangle of consideration – the trifecta triangle. There are a few buckets where the triangle consistently comes into play in the nonprofit arena. The first is donor interaction.

You have to appropriately steward your donors and part of appropriately stewarding is doing what you say you’re going to do with their gift (integrity) and also their information (ethics). The above post is about nonprofits selling donor information. It is allowable by AFP’s Ethical Principles.  The author’s position and mine too, is that it is unethical and that if agencies are going to do it, donors should be given a way to either opt out or, preferably, opt in. I’d take it a bit further.

I challenge AFP to reconsider their position. Nonprofits should not be selling donor information. To me, the idea flies in the face of our standards. It also seems to be contrary to our goals. If we want to retain a donor, selling their information so another agency can attract them as a donor is counterproductive. I’ve said it before: any process that goes against our goal is a bad process.

While we’re on the topic of ethics in fund raising, let me take this opportunity to encourage you to avoid any practitioner who offers you a fund raising model based on commission. AFP’s code prohibits commission based fund raising. Good for them. Commission based fund raising is unconscionable. You should never hire someone on a commission basis to raise contributed income for your organization – that includes grants, special events, major gifts and every other type of resource development. Consultants should offer you a price based on the project at hand or at an hourly rate. Fundraising should not be done on commission.

Finally, and before I move on, development directors can maintain the relationships they cultivate and it is perfectly acceptable for them to continue a relationship created at one agency when they move on to a new agency. It is very hard to un-know someone and no one would expect you to.  However, it is not acceptable – or ethical – to take lists of donors with you when you leave, nor is it acceptable for you to use that list to prospect new donors for your new agency.

Our trifecta triangle also comes into play in other ways related to income, and not just contributed income. Ethics are critical to how you manage and spend your agency’s resources, which should be in accordance with GAAP standards. There should be a finance policy that you follow. It should include how and what gets bid out and how decisions are made once it does. Finally, there should be a salary compensation plan to ensure you are paying a fair wage relative to your expectations, the position, your community and your field.

There are additional considerations related to staff remuneration, specifically ones that are or should be in line with your organizational values. Staff should get paid the same amount for the same job, based experience and education, regardless of their race or gender.

Nonprofits serve to change the world and, often, to move forward a social justice agenda. We need to start with ourselves, which means that we need to ensure gender and racial parity in all of our compensation planning.

I recommend you have a diversity policy and that you go out of your way to ensure diversity of race, religion, gender, ethnicity, ability, orientation, age and experience, all of which will contribute to diversity of thought on your staff and also your board. Different experiences around the table contribute to better generative discussions and better decision making.

Ethics, values and integrity should be first and foremost in social service agencies when considering client interaction. Many of our agencies are seeing people at their worst; when they are scared or hungry or in need of something that far exceeds their reach. How we enter into and manage that relationship is critical.

How are you training your people to deal with clients outside and inside the building?  How does your staff handle it when they run into clients in the community? What about in the waiting room?  Do you train your team to look people in the eye while walking through the room or to avert their gaze?  Do you lock up client files?  Who has access?  When and under what circumstances do you release information?  How do your agency’s values ensure your clients are dealt with in an ethical manner, and with integrity?

The triangle isn’t just operational. It’s also impactful at the board level. Organizations should have a conflict of interest policy and form that each board member signs annually. They should also have a whistle blower or ethics policy. Board members will occasionally come up with things that are wacky (read dangerous) or off mission. Our job as staff (and fellow board members) is to reel them in and make sure that we uphold the ethics of our organization. Unethical or illegal actions have to be addressed, regardless of the position of the actor.

When you put yourself out there as the change agent in a community, you have to be above reproach. The trifecta of ethics, values and integrity can ensure that your agency is deserving of the resources of your community and up to facing its challenges.

When do you think values, integrity and ethics come together to impact our sector?  What is your opinion of agencies selling donor information?  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.

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.

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