Does your non-profit board sometimes do the opposite of what it wants to do?

December 13, 2013 erik Board governance, organizational development

Jerry’s Trip to Abilene

By John Greco
Originally published on March 15, 2012
Re-posted with permission from johnponders blog
That July afternoon in Coleman, Texas was particularly hot — 104 degrees according to the Walgreen’s Rexall’s thermometer. In addition, the wind was blowing fine-grained Texas topsoil through the house. But the afternoon was still tolerable; even potentially enjoyable. A fan was stirring the air on the back porch; there was cold lemonade; and finally, there was entertainment. Dominoes. Perfect for the conditions. The game requires little more physical exertion than an occasional mumbled comment, “Shuffle ‘em,” and an unhurried movement of the arm to place the tiles in their appropriate positions on the table. All in all, it had the makings of an agreeable Sunday afternoon in Coleman. That is, until my father-in-law suddenly said, “Let’s get in the car and go to Abilene and have dinner at the cafeteria.”
I thought, “What, go to Abilene? Fifty-three miles? In this dust storm and heat? And in an unconditioned 1958 Buick?”
But my wife chimed in with, “Sounds like a great idea. I’d like to go. How about you Jerry?” Since my own preferences were out of step with the rest, I replied, “Sounds good to me,” and added, “I just hope your mother wants to go.”
“Of course I want to go,” said my mother-in-law. “I haven’t been to Abilene in a long time.”
So into the car and off to Abilene we went. My predictions were fulfilled. The heat was brutal. Perspiration had cemented a fine layer of dust to our skin by the time we arrived. The cafeteria’s food could serve as a first-rate prop in an antacid commercial.
Some four hours and 106 miles later, we returned to Coleman, hot and exhausted. We silently sat in front of the fan for a long time. Then, to be sociable and to break the silence, I dishonestly said, “It was a great trip, wasn’t it?”
No one spoke.
Finally, my mother-in-law said, with some irritation, “Well, to tell you the truth, I really didn’t enjoy it much and would rather have stayed here. I just went along because the three of you were so enthusiastic about going. I wouldn’t have gone if you all hadn’t pressured me into it.”
I couldn’t believe it. “What do you mean ‘you’all?” I said. Don’t put me in the ‘you’all’ group. I was delighted to be doing what we were doing. I didn’t want to go. I only went to satisfy the rest of you. You’re the culprits.”
My wife looked shocked. “Don’t call me a culprit. You and Daddy and Mama were the ones who wanted to go. I just went along to keep you happy. I would have had to be crazy to go out in heat like that.”
Her father entered the conversation with one word: “Shee-it.” He then expanded on what was already clear: “Listen, I never wanted to go to Abilene. I just thought you might be bored. You visit so seldom I just wanted to be sure you enjoyed it. I would have preferred to play another game of dominoes and eat the leftovers in the icebox.”
After the outburst of incrimination, we all sat back in silence. Here we were, four reasonably sensible people who — of our own volition — had just taken a 106-mile trip across a godforsaken desert in furnace-like heat and a dust storm to eat unpalatable food at a hole-in-the-wall cafeteria in Abilene, when none of us had really wanted to go. To be concise, we’d done just the opposite of what we wanted to do. The whole situation simply didn’t make sense.

— Jerry Harvey, The Abilene Paradox and Other Meditations on Management.

My first exposure to this story was as I was unknowingly about to experience it…
Three colleagues and I were all out-of-towners in Memphis for business. After a stressful day at work we had just had a nice dinner. While leaving the restaurant Don suggested “You guys want to continue our discussion while we drive around Memphis a bit? Jude responded with a lukewarm “okay;” I said I’m up for it, even though I was tired and wanted some down time. Then mild-mannered, soft-spoken Laura chimed in with “sounds like we might be taking a trip to Abilene …”
I didn’t get the reference.
Thankfully, Don knew exactly what she meant, and we went back to our respective hotel rooms for the evening.
The lesson never has left me.
That might be because I have since seen teams of smart and committed people going on their own trips to Abilene… and some of these teams included me. None of them, quite obviously, included Laura.
Yes; I have been in Abilene-bound meetings and I have been on Abilene-bound teams. Have you as well? Have you seen some of these trips being taken, and perhaps you might admit your participation as well? … Odd, isn’t it?
Odd, unsatisfying, and unhelpful.
There’s a powerful social dynamic at play here. I need to bone up on what exactly that is, but, for now, I just know that I do not want to take any more trips to Abilene.
I need to take a trip and find Laura… or, I need to become Laura.

You need more women in your non-profit boardroom!

November 19, 2013 erik Board development, Board governance, organizational development, volunteers

rosie the riviter Last week I was out to lunch with two male non-profit friends in downtown Chicago when the topic of women board volunteers came up. This happens from time-to-time, and when it does I always bite my tongue because I tend to have strong opinions on this subject. So, I took a deep breath and prepared for what I assumed was going to be one of those “difficult and uncomfortable conversations“. Boy oh boy . . .was I wrong (and pleasantly surprised).
Let me start by explaining what I mean by “I have strong opinions . . .” The fact of the matter is that my opinions are sexist (at least I think they are). When I am engaged in conversations about non-profit board development and I’m feeling bold, I like to say, “If you want lots of discussion in the boardroom about what ‘should’ happen, then recruit a lot of men to serve on your board because they will talk a subject to death. If you want something done, recruit some women because they are the ‘do-ers’ of our society.”
A good friend of mine would respond to this by saying, “All generalizations, including this one, are incorrect.”
So, I usually shy away from sharing this opinion because:

It feels like a sexist thought
It has gotten me in trouble in the past and sparked heated discussions
The “all generalizations” comment is usually right on target

Let’s fast forward to my lunch conversation in downtown Chicago last week as I prepared for a lunch discussion that I assumed was going down the wrong road.
The first words out of one guy’s mouth were positive and progressive. He shared a story about the women on his board being extraordinarily active and engaged. The other guy talked about wanting to develop what used to be called in the old days a “women’s auxiliary” (and he was calling a Women’s Board). As I shook my head in amazement at the surprising turn this conversation quickly took, the most amazing thing happened. One of the guys validated what I keep referring to as “my sexist opinion” by pointing to research data that he just read about in the OpEd pages of the New York Times on October 23, 2013.
I couldn’t believe my ears, and I asked my lunch partners to please forward me that editorial column.
It arrived the next day in my email inbox. It almost looked like that one special Christmas present that you most prized and treasured as a child (and in the spirit of A Christmas Story read this as me saying that email was the equivalent of an Official Red Ryder Carbine-Action Two-Hundred-Shot Range Model Air Rifle).
The editorial was titled “Twitter, Women and Power,” and it was about the all male boardroom at Twitter, which was just a few weeks from launching its IPO on Wall Street.
I strongly encourage everyone who has any role in your non-profit organization’s board development to read this article. It is definitely worth the click! However, for those of you working with very little time today, here are a few of the major points from the article:

Domestic companies that have women board members earn a higher rate of return on invested capital
International companies with women on their boards earn a surprisingly higher amount of operating capital
During the recent government shutdown, it was our nation’s female legislators who were at the forefront of brokering a deal

After reading this New York Times editorial piece by Nicholas Kristof, I now feel empowered enough to admit that I think women are better fundraising volunteers than their male counterparts. (Uh-oh . . . that little voice inside my head is telling me to shut-up again.)
Does your agency have enough women in the boardroom? How does your board development committee ensure gender balance? What has been your experience on this issue? Please use the comment box below to share your thoughts and opinions.
Here’s to your health!
Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com
http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

Finding the right non-profit board prospects might be harder than you think

November 14, 2013 erik Board development, Board governance, Fundraising, volunteers

strategic thinking2 Sometimes I hear something that hits me just right, and it takes days to get it out of my head. This happened on Tuesday during the Fox West Philanthropic Network’s Philanthropy Day luncheon. The keynote speaker, Dani Robbins, was talking about the different modes of board governance and the importance of facilitating more strategic and generative discussions in the boardroom. Doing so will result in a more engaged board.
Easy as that! Right?
Well, that little voice inside my head started screaming at me. It was saying, “Whoaaaaa! Can strategic and generative discussions be done with any old board members? Or does it take a certain type of board volunteer?”
So, I raised my hand and interrupted Dani’s keynote address. (Sorry, Dani!)
I was half expecting her to say that everyone is capable of engaging in these higher order discussions. I was also expecting her to put the responsibility back on the person(s) who facilitate those boardroom discussions to get the most out of the diversity of people sitting around the table.
However, I got an unexpected answer.
strategic thinking3 Dani suggested that board volunteers who are “strategic thinkers” will have an easier time making the transition from traditional fiduciary modes of governance to more strategic and generative modes.
I suspect this means for many non-profit organizations, who want to make this adjustment to governance, that some thought needs to be put into adding more strategic thinkers to their board recruitment prospects lists.
Once I arrived at this conclusion, I got a mental picture of a committee meeting with board governance volunteers going through their prospect identification and evaluation exercises focused on finding strategic thinkers. As this mental picture became clearer, lots of questions flooded into my head including:

What does a strategic thinker look and sound like?
Where do strategic thinkers live, work and play?
How easy will it be for board governance committees to do this work, especially when most committees (in my experience) shortcut the cultivation and evaluation process and go straight from identification to recruitment?

As I normally do when issues like this start bothering me, I open up my internet browser and go to Google. 😉
I quickly found myself reading a post on CEB Blogs titled “5 Characteristics of Strategic Thinkers“. Here are those characteristics:

Open yourself to perspectives from multiple sources
Incorporate both logic and emotion into your thinking
Seek options beyond today’s reality
Question both the familiar and the to-be-determined
Accept open issues

strategic thinking1 If you’re scratching your head while reading this list and asking “what does THAT mean,” then click the link and read the CEB Blog post. It really is quite good. If you want to learn more, then I suggest you start Googling around. 😉 You also might want to click here and start with this interesting Wikipedia page on strategic thinking.
Let me bottom line what I’m thinking for you this morning.

This isn’t as simple as changing some of the criteria in your gap assessment tool
These characteristics are more subtle than questions of age, gender, ethnicity, occupation, fundraising experience, etc
Only people who know or work closely with board prospects know whether or not they are strategic thinkers, which puts a spotlight on who is serving on your board governance committee
Identifying strategic thinkers for your board recruitment process will require more time spent cultivating and evaluating prospects and less jumping straight from identification to recruitment

What is standing in your agency’s way of transforming its boardroom discussions from fiduciary to more strategic and generative modes of governance? What are you doing to over come those obstacles? Is your board governance committee approaching its job differently when it considers this question? If so, how?
Please use the comment box below to share your thought and experiences. We can all learn from each other.
Here’s to your health!
Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com
http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

Crazy non-profit board meetings and some advice for board volunteers

November 7, 2013 erik Board development, Board governance, organizational development, volunteers

Dani Robbins is the Founder & Principal Strategist at Non Profit Evolution located in Columbus, Ohio. I’ve invited my good friend and fellow non-profit consultant to the first Wednesday of each month (or Thursday as is the case this month) about board development related topics. Dani also recently co-authored a book titled “Innovative Leadership Workbook for Nonprofit Executives” that you can find on Amazon.com.

Board Meetings Gone Wrong

By Dani Robbins
regrets Boards meetings can quickly go from productive to destructive in any number of ways. The following are just a few lessons I’ve learned throughout the years and thought board volunteers might benefit from reading:
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. 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 what the Board has committed to accomplishing.
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 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:

“Let’s call the question” which in Board speak means enough talking, let’s vote.
“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 be 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, board volunteers can object out loud and on the record but be aware that doing so will spend significant political capital. It also may not help, which does not mean you should not do it.
As mentioned in a post titled “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.

Formula for a successful non-profit board volunteer

October 30, 2013 erik Board development, Board governance, volunteers

equation It seems like I’ve been on the road a lot this month, and this allows me to interact with all sorts of talented and amazing non-profit professionals. In fact, just last night I was at dinner with another non-profit consultant who shared with me his “formula” for a successful board volunteer.
Just so you don’t think that I am stealing, I told this person that I planned to share his formula with the world this morning via the DonorDreams blog. Needless to say, I have his blessing. 😉
Here is his secret recipe that he shares in his board development and governance trainings with board volunteers on how to be good at their job:

12 + (3+1) + 3 + 1 + 1 + 70% + 100%

Let me decipher this formula for you:

Make 12 thank you (stewardship) calls per year
Take three donors on a tour of your facility and also invite a prospective new donor on a tour
Make three in-person solicitation calls as part of your agency’s fundraising program (preferably the annual campaign pledge drive, but it can be a major gift solicitation or special event sponsorship call)
Spend one hour per year volunteering on the front line in a program (so that you can be credible when talking to others about your agency)
Participate in one standing committee or task force of the board
Attend at least 70% of board meetings
Be an advocate of 100% of the board making a personal financial contribution to the agency

There you go . . . pretty simple. Of course, this is one person’s opinion about what it takes to be a good board volunteer.
In your opinion, is there anything missing? Would you modify this equation? If so, then how would you do it? Do you have an easily digestible equation like this that you like to share with new board prospects? Please use the comment box below to share your thoughts and experiences. We can all learn from each other.
Here’s to your health!
Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com
http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

Do you know what it takes to build a GREAT non-profit board of directors?

October 29, 2013 erik Board development, Board governance, organizational development, volunteers

You may remember that around the turn of the century there was a rash of failures when it came to the idea of “board governance“. These failures emanated from the for-profit sector — WorldComm, Enron, and Tyco — but it got people asking an important question: “Does a board governance model still work in the 21st Century?” This question logically lead to the next question, which was “What does it take to build a more effective board of directors?”
I stumbled upon an old article 2002 article from Jeffrey Sonnenfeld in the Harvard Business Review titled “What Makes Great Boards Great“. OMG! If you haven’t read this article, it is a MUST READ! While I’m going to hit a few of the highlights in today’s blog post, please trust me when I say this is worth the click.
structural
The usual suspects
How many times have you sat around a board development/governance committee table and talked about how to make your board work better?
I’ve been there more times than I care to admit, and it is almost as if Sonnenfeld was a fly on the wall in all of those meetings. In the first few pages of his article, he rattles off the list of things we’ve all talked about when discussing this issue.

Improving board attendance
Improving the committee system
Diversifying our board (esp. recruiting younger board members)
Focusing on board size and trying to right-size our board

We focus so much on structural best practices, and this never seems to get us any closer to a more functional board.
The human element
There is a pop-up quote in Sonnenfeld’s article that captures his thoughts on this subject perfectly:

“What distinguishes exemplary boards is that they are robust, effective social systems.”

Here are just a few suggestions he offers to those of you trying to build great boards:

Establish and use annual evaluation tools for both the organization and individual
Establish and use accountability tools
Encourage board members to constantly re-examine their roles
Foster a culture of open dissent
Create an organizational culture built on trust and candor

Each of these bullet points could be a blog post by itself. Luckily, Sonnenfeld does a nice job of elaborating on all of this in his article, which is why you really need to go read his article.
Rather than drill deeper, I’m going to throw it open to you and the other readers this morning. What are you doing to build a GREAT board? What do your evaluation and accountability tools look like? What are you doing to change organizational culture and foster respect, openness, trust, etc? What is working and what isn’t working at your agency? Please share your thoughts and experiences using the comment box below. We can all learn from each other.
Additionally, I strongly urge you to click-through and read the Sonnenfeld article in the Harvard Business Review. Sure, some of the for-profit stuff won’t apply to your non-profit agency, but much of it will. You won’t be disappointed.
Here’s to your health!
Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com
http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

What don’t you know about your non-profit D&O insurance policy?

October 24, 2013 erik Board governance

insurance1 Just the other day a friend started talking with me about non-profit directors and officers (D&O) insurance. During the course of that conversation, all sorts of things were discussed and at one point I made a mental note to do a little research. Having just finished my homework, I honestly can say that I completely understand why people don’t like insurance companies — this stuff is complicated.

Let me begin by saying to all of my insurance friends out there . . . I love you. I understand the importance insurance. This will not turn into a rant against you or your employers. I promise!

Next let me suggest to all of my non-profit friends — volunteers and professional staff — that you need to be very careful when it comes to D&O insurance. As I’ve just been reminded by Googling around, the devil is in the details.

Here is some of what I learned . . .

Confusing coverage

I didn’t know until a few hours ago that D&O insurance policies are NOT standardized. In other words, what one company covers in their D&O policy may not be covered in another company’s D&O policy.

To make matters even worse, D&O policies don’t really affirmatively list what is covered. In my experience, just saying that the policy covers “wrongful acts” usually results in board members using their imagination. This is where the trouble starts.

Some of the best advise I read online when researching this topic was:

Read the definitions section of the policy
Read the exclusions section of the policy

By understanding “what is what” and “what isn’t what,” you can get a better picture of what your actual coverage looks like.

Typical exclusions

insurance2 The list is long, but the following things are typically excluded from the average D&O insurance policy:

Bodily injury (General Liability)
Property damage (General Liability)
Professional services (Malpractice)
Handling Funds (Fidelity, Bond)
Nuclear radiation, pollution damage
Illegal acts
Dishonest acts
Intentional misconduct
Punitive damages
Fines, penalties and matters uninsurable by law
Failure to obtain adequate insurance
Contract claims
Employee retirement income security act (ERISA)
Antitrust, price-fixing, restraint of trade
Peer review, standard setting
Credentialing, certification
Discrimination
Sexual misconduct
“Insured versus insured”
Injunctions/no pecuniary suits

I found this list in a document published by the Ohio Youth Soccer Association North (OYSAN), which was at one time part of a larger handbook published by the Nonprofits’ Risk Management and Insurance Institute.

If you find yourself saying “Hey, but I need coverage for those things,” then don’t worry because your insurance company is more than willing to sell you other policies to cover those things. 😉

When you assume . . .

You know how this expression ends, and it is very applicable to what most board members do when it comes to D&O insurance.

A long time ago in a galaxy far, far away . . . a friend of mine was the board president for a non-profit organization that went out-of-business. As the board started down the long, sad path of winding things down, the following facts were discovered:

the executive director hadn’t paid payroll taxes in three quarters
there wasn’t enough money in the bank to pay the final payroll
many vendors hadn’t been paid in full for their products or services

To make a long story short, Uncle Sam always gets his, and you must pay your employees. These things aren’t covered by D&O insurance (in fact, as I recall, the executive director also forgot to pay the D&O insurance premium). In the end, board volunteers were forced to write a number of big checks and those who couldn’t had a lein placed on their house by the IRS.

Ouch!

Best practices?

insurance3 I shared some of my research with a group of amazing non-profit consultants tonight. The consensus of this group of very smart people was that board volunteers never ask the hard questions about their D&O insurance policies until it is too late.

This prompted me to ask the obvious question, “What are some best practices that non-profit boards should follow?” Here is what they said:

Once a year in a board meeting, time should be set aside to review policies and coverages with an opportunity for Q&A.
Boards should pay for a lawyer, who isn’t a board member and who specializes in risk assessment, to review your policies and inform the board about their gaps.
Engage an insurance broker who can help you shop policies and tailor the search to your needs.

Yes, insurance can be boring and board volunteers may not want to do this every year, but the angels of our better nature must prevail. Failure to do the right thing when it comes to D&O insurance and other insurance coverage all too often results in tragedy and hardship for the organization and board volunteers.

What is your organization’s process for renewing insurance policies? How do you educate board members about your agency’s gaps and their risk and exposure? Please use the comment box below to share your thoughts and experiences.

Here’s to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com
http://twitter.com/#!/eanderson847
http://www.facebook.com/eanderson847
http://www.linkedin.com/in/erikanderson847

Is your organization well positioned for strategic planning?

October 10, 2013 erik Board governance, organizational development, Planning

readiness1 I believe there is a misconception out there about strategic planning because I keep running into executive directors who think just because the current plan is expiring that is must be time to begin work on a new strategic plan. I also oftentimes run into folks who believe it is a perfect time to start planning when their agency is experiencing instability, blurriness, and confusion. In my humble opinion, there is a time and place for strategic planning and embarking on this journey at the wrong time can be at best frustrating and at worst damaging.

Readiness questions

Just the other day, I was talking with a friend about this issue, and they asked the obvious question, “How do you know when the conditions are right?” I started off saying something stupid like: “You’ll know when the time is right.” I knew it was dumb advice as it was coming out of my mouth.

So, I went home and started digging through my library of planning materials. I came across an old strategic planning document from a previous employer who had partnered with BoardSource to create the manual. So, you know it is good stuff. 😉

readiness3 As I had hoped, I found a section titled “Key Questions to Assess Readiness and Capacity”. Here are those questions:

Do your regular board meetings (apart from retreats) include at least one strategic, or “Big Picture,” issue on the agenda?
Is your current strategic plan based on realistic and comprehensive assumptions about the agency and its external environment? What considerations are missing?
How might changing demographics and other economic, social, and political trends affect a constituent, client, or membership base that provides a primary revenue stream?
What goal should the agency strive to achieve for financial reserves (for example, at least one-half of the operating budget)? Are there some potential revenue streams to consider?
Are new priorities clear and the proposed means of paying for them realistic? Which programs should be self-supporting? Which might be operated at a loss in order to fulfill the agency’s mission?
What metrics do you use to monitor organizational effectiveness?
Have you considered all the options and chosen a planning method (aka planning model) that works best for the agency? Are you flexible enough to combine approaches if that suits our culture?
How do you include board members who are not on the planning committee as participants in the process?
What performance measures should be included in your strategic plan?
How do you keep our strategic plan active and visible within and outside the agency?
How often do you conduct strategic planning? Does that cycle make sense for the agency?
When you are ready to undertake a planning process, are you clear about why you are planning?
Are you clear about the roles of the board, executive director, and staff in strategic planning? Do you honor the distinctions?
Have you used consultants in the most effective ways possible? If you have never used a consultant, should you consider doing so?

I’m not thrilled with these questions because I think they blend together two different issues — capacity and readiness. So, if you’re just trying to decide whether or not your agency is ready to start down the strategic planning road, I suggest you and your board governance committee spend some time chewing on questions 7, 8, 11, 12, and 13.

The other questions are important, too. I just think the five question I just highlighted cut to the heart of the matter.

We’re not ready, but we still need a plan!

If your board governance committee determines that you’re not ready, but you see difficulty down the road and think you need a plan to guide your efforts, you may not be out-of-luck.

You should look into developing a short-term tactical plan focused on the next 12 months.

Perhaps, a business plan or a something addressing a specific agency function (e.g. resource development, program, facilities, etc) might be a better use of time for you and your volunteers.

Did you mention consequences?

Earlier in this post I said, “. . . there is a time and place for strategic planning and embarking on this journey at the wrong time can be at best frustrating and at worst damaging.”

I been down this path many times, and I encourage you to please learn from my mistakes.

If you start down a strategic planning road when you aren’t ready to do so, I’ve seen the following things happen:

It feels like you’re spinning your wheels, and you end up spending LOTS of time of stuff that you thought were obvious.
Volunteers get frustrated. They feel like they’re going nowhere fast. Some even express that it is a waste of their time.
I’ve seen board members resign in the middle of difficult strategic planning processes.
I’ve seen major disagreements result in boardroom rifts.
I’ve also seen executive directors get fired.

How has your agency determined readiness? Do you have other questions to add to the list? Please use the comment box below to share your thoughts and experiences. We can all learn from each other.

Here’s to your health!

Non-profit governance: The work of the board, part 5

October 2, 2013 erik Board governance, Planning

Dani Robbins is the Founder & Principal Strategist at Non Profit Evolution located in Columbus, Ohio. I’ve invited my good friend and fellow non-profit consultant to the first Wednesday of each month about board development related topics. Dani also recently co-authored a book titled “Innovative Leadership Workbook for Nonprofit Executives” that you can find on Amazon.com.

Governance: The Work of the Board, part 5

Setting the Mission, Vision and Strategic Plan

By Dani Robbins

strategic planning 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 plan.

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 non-profit 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 plan” 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 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 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 measurements, assignments and due dates is just a list of goals that are unlikely to be accomplished.

For information on what 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.

Strategic planning 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.

Non-profit budget season: The old Texas Two Step

September 19, 2013 erik Board governance, Fundraising

The other day I received an email from an old friend asking me to share my thoughts about the “right way” for a non-profit organization and its board to construct a budget. Do you start with revenue projections and develop the agency’s fundraising plan first? This way everyone knows what the expense budget can’t exceed. Or do you start with the expenses and try to build a revenue budget that supports the organization’s mission, vision and programming?

My first thought when I got this message was: “OMG! It is budget season for many non-profit agencies. Ugh . . . it is almost October. Where did winter, spring and summer go?”

My second thought was actually more of a chuckle because I’ve always thought of budget season as a bizarre dance between board and staff that resembles something like the Texas Two Step as demonstrated in this YouTube video.

[youtube=http://www.youtube.com/watch?v=D_H1x2MpeEk]

For the record, I don’t think there is a right and wrong way to undertake budget construction. There are obviously very smart people who reside in both camps — revenue first vs. expenses first. When I was an executive director, I tried to do the uncomfortable thing and sit on the fence. Ouch!

budget The following is a thumbnail sketch of what my process looked like:

I put the budget process in writing with a narrative description and timeline, then built consensus around the importance of following process and adhering to deadlines.
I simultaneously started working with the finance committee and the resource development committee.
The finance committee and I worked with program staff, and everyone collaborated around constructing reasonable expense budgets with mission, vision and quality programming in mind.
The resource development committee and I worked on developing a detailed resource development plan chock full of reasonable revenue projections, range of gifts charts, goals, strategies, volunteer prospect lists, grant prospects, annual campaign prospects, special event prospects, fundraising calendar, and action plans.
Sometime in October or November the two committees met jointly. They shared and compared their work. The FUN was just beginning because there was always a gap on the bottom line.
Consensus was built and both committees went back to work. The finance committee was usually tasked with finding cuts that wouldn’t hurt the agency’s mission or damage its organizational capacity. The resource development committee went back to the drawing board to find reasonable revenue enhancements.
Both committee were tasked with reporting their progress back to the board every month throughout the process. The hard part was staging those board meetings in a manner where generative discussions would happen and result in: 1) board volunteers who didn’t sit on those committees an getting and opportunity to weigh-in and 2) both committees getting an opportunity to engage the larger board in decision-making focused on strategies and tactics (esp. those related to revenue generation).

When the committees converge in the process, the age-old Texas Two Step issue would always float to the top. Do we close the gap with budget cuts or revenue enhancements?

My philosophy was always “revenue first” because I felt like the mission of the organization called upon us to make that attempt first. However, this doesn’t entail just changing projections and modifying our best guesses. It involved adding more prospects, tweaking strategies, and adding revenue streams.

Some years I won this argument. In many other years, I lost this argument, and the finance committee would produce their hatchet. (I am embarrassed to admit that one year I lost the ability to send donors a newsletter thanks to that hatchet. I should’ve fought harder because donors need to see what their investment is doing.)

Ahhhhh . . . You gotta love the old Texas Two Step. 🙂

As I sat on my couch and texted back-n-forth with this old friend, my mind wandered (as it tends to do) and I had a third thought:

If you like sausage, you don’t want to know how it is made!

making sausage I am not suggesting that my process is the right way to put a non-profit budget together. However, I do believe strongly in the following few budget construction principles:

Budgeting is a collaborative activity between board and staff. (Avoid a situation where staff puts it together and the board either behaves like the two Muppets who sit in the balcony or simply just rubber stamps it.)
Projection of numbers (esp. revenue) isn’t a dart throwing activity. It is rooted in historic data, trends, actual prospect names, and strategies. Don’t ever use “plug numbers“.
There is a process with an explicit timeline. It is written out. It is created collaboratively and agreed to by all parties.

Enough of my waxing poetic about how your non-profit should tackling budget season. Here are a few online resources and documents that I found:

Nonprofit Accounting Basic$: “The Budget Process“
Larsen Allen LLP Effect Magazine: “Nonprofits: Improve Your Budget Process“
Clifton Gunderson LLP Count on Insight: “Best Practices for Nonprofit Budgeting and Cash Forecasting“

Is your organization in the middle of its annual budget construction process? What works for you? What doesn’t work? What do you plan on doing differently next year?

Please use the comment box below to share your thoughts and experiences.

Here’s to your health!