Don’t put Dorothy on your board of directors

July 19, 2013 erik Board development, Board governance, organizational development

On Monday, I shared with you a few observations from The Wizard of Oz and Oz: The Great and Powerful as I think it pertains to non-profit work. At the end of Monday’s post I promised to take you further down the Yellow Brick Road by revisiting a series of Oz-inspired posts from two years ago. Today’s post is about board composition and board development. Enjoy . . . here’s to your health! ~Erik

Don’t put Dorothy on your board of directors

Originally published on October 27, 2011

dorothy September 15, 2008 . . . do you remember where you were and what you were doing? It was the day the world changed. It was what some people have called an “economic 9-11″. Regardless of how you characterize the day that Lehman Brothers filed for bankruptcy and the stock market started its crash, it is hard to argue the following: 1) the economic paradigm we all used to live in shifted and 2) nothing will ever be the same again.

This week I have used characters from “The Wizard of Oz” to talk about current challenges facing the non-profit sector. Today, we will spend a moment talking about Dorothy.

Dorothy is an iconic character who has been described as a “level-headed, plucky, resourceful, determined, all-American, populist”. However, I’ve always seen her as a traditional “conservative”. Don’t believe me? Refresh your memory with this quick YouTube clip. Of course, I don’t mean this in any kind of political way, but more of the traditional meaning of “holding to traditional attitudes and values and cautious about change or innovation”.

You cannot afford to have Dorothy on your board of directors during these tough and turbulent economic times!

Mentally take a look around your board room and see if you can identify how many Dorothy-like volunteers occupy chairs. They are kind folks (dare I say friends) who look and sound like the following:

They are frightened by the economic “tornado” whirling throughout the world. They talk about economic news constantly.
They wish for yesteryear and reminisce about times when your non-profit was facing a different set of circumstances. They fixate on making things better . . . just like they “used to be”. They’re focused on making that formerly kick-butt special event awesome again. They’re insistent that you can hold onto all of your government grants if you just tried a little harder. After all, there is no place like home.
They are visibly closed to new and innovative ideas that have not been tried. They believe ePhilanthropy is a passing fad. They won’t entertain ideas around merger, acquisition, or strategic alliances that share back office functions. After all, that is not the Kansas they so fondly remember.

Don’t get me wrong. I am not suggesting a “witch hunt” to root out these folks and fire them. Dorothy serves an important role on your board. She is that cautious voice that keeps you from getting into trouble. She will stop you from pulling the plug on your annual campaign and direct mail appeals and “going all in” on ePhilanthropy efforts. Valuable? YES! However, what happens when you have too many Dorothy-like board members? Or what if you have those well-intentioned people serving in the wrong roles (e.g. board president, annual campaign chair, strategic planning committee, etc)?

My best two pieces of advice for non-profit staff and board volunteers this morning are:

Be especially strategic and thoughtful about where you ask these people to serve in your organization. This means that you need to: a) identify who these folks are and b) have a clear understanding of which volunteer opportunities are acceptable for conservative personalities.
Focus your board development efforts over the next year on recruiting people in your community who don’t resemble Dorothy to serve on your board. This is not the time to pine for Kansas! This means your board development committee needs to double down on the “prospect identification” and “prospect evaluation” elements of the board recruitment process. Gone are the days when everyone sits around a table and tosses out names of good, kind and resourceful people. BE STRATEGIC!

I suggest that the type of people your board development committee should look for exhibit some of the following characteristics:

They don’t appear to be “personally” economically impacted by the Great Recession
Their business or line of work seems to be doing fine
They are naturally positive and have a decent outlook on the future
They seem to be open to new ideas (as evidenced in their personal and professional lives)
They are “outside-of-the-box thinkers (as evidenced in their personal and professional lives)

Remember, if you want to keep the flying monkeys away from your non-profit agency, STAY AWAY FROM DOROTHY.

OK — if you aren’t buying into my cheesy “Wizard of Oz” analogy, then please go to the library and borrow the book “Who Moved My Cheese“. You’ll thank me later.

How has your agency adapted to the new realities? Have you changed your resource development model or are you still trying to do things the old way? Do you see your board development efforts changing or focusing on different types of prospects? Please use the comment box below and weigh-in. Please remember that we can all learn from each other. In fact, it is probably the most effective way many of us learn.

Here is 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

Are you King of your non-profit forest?

July 17, 2013 erik Board governance, Fundraising

On Monday, I shared with you a few observations from The Wizard of Oz and Oz: The Great and Powerful as I think it pertains to non-profit work. At the end of Monday’s post I promised to take you further down the Yellow Brick Road by revisiting a series of Oz-inspired posts from two years ago. Today’s post is about leadership. Enjoy . . . here’s to your health! ~Erik

Are you King of your non-profit forest?

Originally published October 25, 2011

cowardly lion As a new business owner who just opened up a nonprofit & fundraising consulting practice, I’ve made it my business to “get around”. In addition to visiting with many of my oldest and dearest non-profit friends in Elgin, Illinois, I recently attended a regional Boys & Girls Club conference and engaged countless staff and board volunteers from around the country through a very aggressive social media strategy including Twitter, Facebook, LinkedIn and this blog. While I don’t want to exaggerate, I was surprised at how many conversations looked and sounded like this“Wizard of Oz” YouTube clip.

Here were some of the things heard I nonprofit CEOs, fundraising professionals, and board volunteers saying that leaves me wondering “King or Coward”:

“Erik, I am so sick and tired of my board volunteers passing the buck on fundraising and expecting staff to pick-up the pieces. I’m just gonna tell them ‘how it is’.”
“Erik, our staff has let us down and not provided the necessary leadership during these tough economic times. I’m afraid the board will just need to look at making draconian cuts and muddle through these tough times.”
“Erik, donors are cutting their charitable giving during these tough economic times. So, the only thing left to do is tell donors and anyone who will listen that our agency is on the brink of closing its doors if people don’t start stepping up.”
“Erik, I know we need to invest heavily in capacity building activities during this economic down turn if we have any chance at making it out the other side. However, I just know that the board isn’t up for this kind of work at this time, and I won’t use my influence to push for something that doesn’t have legs.”
“Erik, I refuse to invest in ‘planning’ activities because they just don’t work. We once wrote this amazing plan, and it just ended up on the shelf collecting dust.”
Erik, fundraising is the board’s job, and I am hesitant to offer my opinion on what needs to be done because then it becomes ‘my idea’. And if ‘my idea’ falls short, then it just becomes one more reason for the board to fire me. Remember . . . board volunteers don’t fire themselves, they always fire the executive director.”

I understand that tough economic times has a chilling effect on leadership, but your only chance at surviving these strange and new times is by eating an extra bowl of Wheaties in the morning and showing up for work ready to take some smart risks and actively lead. Here are a few observations and suggestions I have for the non-profit community as my “listening tour” comes to a close:

My kindergarten teacher always taught me that “telling people” isn’t very effective if you want them to be your friend. I suggest sharpening your listening skills and do more asking than telling when it comes to engaging donors, volunteers and board members.
The “blame game” is an old and tired game. If the board is unsatisfied with the agency’s performance and is feels inclined to play this game, my advice to those board volunteers is skip it, save your breath, fire the executive director (because you know you’re going to do it regardless of what anyone tells you), and get on with the business with digging out of your hole. Brutal? Sure it is, and I’m uncomfortable with the recommendation. However, how many times have you seen board and staff struggle through tough times with lots of finger-pointing and it all worked out “happily ever after”??? Never! So, be decisive and move on to what is important — survival. By the way, after the hatchet job and search for a new leader, it is probably important the board turn the mirror on itself, dust off the guillotine and quickly get rid of non-performing, poor fundraising members. I suspect many of those soon to be headless board volunteers were leading the charge to fire the executive director. Vive Le France!
Pointing the finger at donors is the quickest way to lose a finger. I don’t care if it is an individual, corporation, foundation or government agency. I’ve seen “the little boy who cried wolf” fundraising strategy work once, but it gets more difficult to fundraise the more you use this tactic. Of course, the reason for the fast diminishing return is because no one likes to invest their charitable giving in what they perceive to be a “sinking ship”. Stay positive and double down on stewardship efforts. People like to see the good things their contributions helped produce. So, show it to them.
Written plans that fall short are most likely the result of: a) a poorly designed planning process that did not appropriately ‘engage’ those you needed to step forward during the action plans part of the process, b) thin-skinned leadership who didn’t like what they saw during the evaluation phase and dismissed the call to action by putting their heads in the sand, or c) a poorly designed implementation tools (e.g. committee work plans, staff performance plans, dashboards, scorecards, etc). Don’t toss one of your few ‘engagement tools’ out the window. Instead, double down on do it differently and better!
Attention agency staff: If you find yourself treading water and paralyzed by fear of failure, then please do the honorable thing and resign. I don’t say this to be mean, but board volunteers need strong leaders who know how to LEAD. With leadership, sometimes comes failure. Right? So, don’t be the “Emperor who walks into the room without any clothes on“. (Please accept my apology for this last YouTube link. It was salty and unprofessional, but it was sooooo funny I just had to share it because this uncomfortable and funny video is exactly the same feeling we all share when a non-profit staff person is paralyzed and unwilling yet pretending to lead)

I could go on and on, but I’ve gone on too long. Please use the comment box below and share a story on how you are “king” of your non-profit castle and not a “coward”. How are you investing in capacity building efforts? How are you engaging others who seem to be stuck in neutral during these tough times? Please weigh-in because we can all learn from each other. Your words can also serve as inspiration to others who are struggling.

Here is to your health!

Board Development Done ….. Less Effectively

July 3, 2013 erik Board development, 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 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.

process1 Last month I wrote on post entitled Board Development Done Right. Let’s talk today about the other side of board development: what it looks like when it’s done less effectively.

In the absence of a board development plan that is being followed, most organizations do some combination of the following:

A board member or member of the senior staff meets someone in the community who they think might be good for the board.
They pass the name on to the Board Chair or the CEO who later meets with the prospect and may or may not invite them to join the board.
If they do, and the person says yes, they bring the name up at the next board meeting, and that person is voted upon and becomes a board member.
Usually, but not always, the new board member is brought on board without an orientation as to what the expectations and requirements are of board leadership.

It’s a process. It’s not great, but it is the process that is fairly consistently followed by many organizations.

Will that process build a great board? Probably not, but it works — to a degree — and it’s much better than the alternative.

process3 The alternative is this with the same beginning:

a board member or senior staff meets someone in the community who they think might be good for the board and asks them to join the board.
They say yes.
That person shows up at the next board meeting and is voted upon while in the room and voila! They are a board member.

Lest you think I am exaggerating . . . I attended a luncheon not too long ago where I was seated next to a nonprofit CEO. He asked what I did for a living, and I shared that I was a non-profit management consultant, who primarily works with organizations on board governance, executive couching, system development and planning. He immediately asked me to join his board.

As I’ve written before, strong boards beget strong organizations. It works the other way too. Less effective boards beget less effective organizations. Those boards hire less talented CEOs (or the wrong CEOs), for whom they don’t set goals and whom they don’t evaluate. They do not have a written strategic plan or a board development plan (or many other plans for that matter). There is no orientation process, no education and no board evaluation.

transparency Here’s the rub . . . Board strength isn’t just an internal issue that is invisible to the community. It is visible. Here’s what it looks like:

The organization has a revolving door of CEOs.
The CEO has a revolving door of senior staff.
The CEO has a very strong personality and does the work of the board, which the board allows either because: 1) they don’t know they shouldn’t, OR 2) they are afraid that if they challenge the CEO s/he will leave, and they don’t have the time, the inclination, the ability, or a plan to deal with.
The Board Chair has a very strong personality (and may also be a big donor) and other board members are afraid to alienate him/her.
There are quorum issues.
Board members tend to stay only one term.

Just because it’s like this today, don’t mean it has to stay like this.

Organizational transformation is possible and even probable with the right plan and the emotional fortitude to implement that plan. Like any other challenge in life, if you don’t like the path you’re on, pick a new path! Get your board together (or at least your executive or nominating committee) and come up with a plan.

Start by answering these questions:

Who do you have around the table?
Does everyone look the same?
Is everyone, in fact, the same?
Are there gaps in skill set, faith, race, capacity, interest, thought, ability, orientation, age, and gender?
Are there leaders in your community who can fill those gaps?
Who can get in front of those people, introduce and engage them in your organization?
How will you decide when and to whom to offer board seats?
When will you vote on new members?
What will you include in your orientation?
What type of evaluation will the board conduct of itself and how often?
What type of education does the board need and want?

Board development is the intentional process by which the board is perpetuated, evaluated, and educated. Let’s get to it!

What’s been your experience? How have you built a board? As always, I welcome your experience and insight.

Get your ducks in a row if your non-profit accept government grants

July 2, 2013 erik Fundraising

govt funding2 The news last week that the Justice Department will freeze grant funding for Big Brothers Big Sisters (BBBS) should send a chill up the spine of every non-profit organization who accepts government funding.

Here is the CliffNotes version of what is going on:

BBBS co-mingled its federal grant dollars with its general fund,
Oversight of disbursements from the national organization to its local affiliates was allegedly lacking,
Documentation required by the grant agreement allegedly wasn’t well or is missing, and
Grant dollars were allegedly spent on things it shouldn’t have been.

If you’re interested in more information, here are a few links you may want to click on:

CBS News: “Justice Dept. freezes funding to Big Brothers Big Sisters“
Fox News: “Justice Department freezes funding to Big Brothers Big Sisters following audit“
News Talk Radio KRMG: “Big Brothers Big Sisters funds frozen by Justice Department“

As I said in the title to this blog post, I see this as a cautionary tale for all non-profit organizations who accept public funding from any level of government (e.g. local, state or federal).

Why?

govt funding I believe that when money is abundant controls are less strict. Conversely, when resources are scarce . . .

every penny is watched,
those agencies that don’t have the money are making the case for why those who do have the money shouldn’t have the money (e.g. classic have’s versus have-not’s),
there is a debate occurring among policymakers about the “role of government” and whether or not government should even be in the business of allocating money in this manner (e.g. redistribution of wealth versus letting private philanthropy markets do so), and
decision-makers are looking for reasons to take money away because it is easier to tell voters that funding was eliminated when there are good reasons (and alleged mismanagement of funding is always a great reason).

Here are a few simple and cheap things you can do to ensure your agencies doesn’t end up in the same place as BBBS:

Assemble a task force of board volunteers to help you conduct an internal review of your government contracts.
Pull out your grant agreements and carefully review the items you are contractually obligated to deliver.
Randomly conduct spot checks of documents you are contractually obligated to keep.
Randomly conduct spot checks of expenditures charged to the grant and ensure they were allowable expenses.
If you find discrepancies, put together action plans to fix the problems and monitor implementation. If money was inappropriately used, re-appropriate / re-budget the money and use it in the manner that it was intended.
Document this process simply by keeping meeting notes. This way, if you get audited, you’ll be able to demonstrate your due diligence and commitment to internal controls.

Are you concerns about the recent developments between the Justice Department and Big Brothers Big Sisters? Are you taking special precautions at your agency to get your ducks in a row? Do you think I am overreacting? Please scroll down and share your thoughts in the comment box below.

Here’s to your health!

Are fundraising professionals “ashamed”? Too busy? Too lazy?

June 21, 2013 erik Fundraising

Welcome to O.D. Fridays at DonorDreams blog. Every Friday for the foreseeable future we will be looking at posts from John Greco’s blog called “johnponders ~ about life at work, mostly” and applying his organizational development messages to the non-profit community.

In a post titled “I’m Ashamed?,” John talks about an old Danish proverb that goes something like this: “He who is afraid to ask is ashamed of learning.” This post and the proverb made me think of so many of my friends who are fundraising professionals, and it got me wondering if “shame” has something to do with how they shy away from engaging board members, donors and fundraising volunteers.

Some of you are probably wondering what the heck I’m talking about because every time you show up at a fundraising event you see volunteers running in every direction. So, let me provide a few examples:

Too many resource development plans (aka fundraising plans) are written behind close doors without any input from those who we depend upon to help with implementation. And then we wonder why no one is jumping in to help and why board members are acting as if to say: “That’s not what I agreed to do … go implement YOUR plan.”
Too many donors make one charitable contribution and then are never heard from again. I don’t see many fundraising professionals picking up the phone, organizing lapsed donor focus groups, meeting individually with, or surveying these donors and asking a few simple questions.
I certainly hear many of my fundraising friends complain about how their executive director is disengaged from the fundraising program. However, I don’t see many of those folks exhibiting tenacity by asking-asking-asking. There are so many different questions to ask an executive director, and I witness lots of surrendering before they get to the second question.

I could go on and on with examples, but I’ll stop here because I think the better question, which is posed by the Danish proverb, is WHY don’t we ask more questions and WHY don’t we ask for more help?

So, I thought about the WHY and here are some of the possibilities I came up with:

The Danish are right . . . some people feel a sense of shame in asking for help. It gives people the impression that you’re not capable of doing the task at hand, even though you might be perfectly capable and trying to cultivate, engage, steward, etc.
It is easier to just do it yourself. Asking and involving others usually means investing more time in doing something. Even though a case can be made for it being time well spent, it is easy to rationalize and justify not doing so because your calendar and task list is slammed.
There is a sense of having “job security” in being the only person making the agency’s fundraising program work.
Perhaps, it is simply a matter of not caring???

I’m sure there are a number of other possible explanationz, but it is Friday and thought I should ask you for some help. 😉

Please take a moment to ponder WHY and then scroll down and share one additional explanation in the comment box below.

Have you ever sat in a meeting or training, had a question and not asked it? Have you ever been in a board meeting marveling at why a board was making a particular decision and not jumped in with your questions? Have you ever been in front of a donor and not asked a ton of questions about what makes them tick, who they really are, and why they’re giving to you?

After you think through some of these questions, you’ve earned the opportunity to peek at some of the following websites that speak to the issue of asking good questions:

The Resource Alliance: “7 questions every fundraiser should ask a potential donor“
GuideStar: “Fundraising’s Four Magic Questions: Answer These and the Gifts are Yours“
Joan Garry: “10 Good Questions Board Members Should Ask“
Denver Post: “Five questions every nonprofit donor should ask“

You should also go back to a series of posts I wrote a year ago on this subject:

DonorDreams blog: “Questions every non-profit board member should be asking“
DonorDreams blog: “Questions you need to get answered before asking people to join your board“
DonorDreams blog: “Fundraising questions to ask donors and anticipate from them“

Here’s to your health!

What are you doing with your non-profit data?

June 13, 2013 erik Board development, Board governance, Fundraising, organizational development

If you are collecting data on your non-profit organization’s performance and doing nothing with it, then you should be tarred and feathered. You are too busy to be doing things that don’t get you a return on investment on your time. Unfortunately, data collection can be time-consuming if you haven’t built good systems to make collection easy, and there are too many small non-profit organizations who are under-resourced and haven’t built those systems.

So, why do so many agencies still invest the time to collect data when it is difficult to do and so incredibly time-consuming? In almost every instance that I’ve seen, it is simply because a donor is requiring it or they are affiliated with a national organization that makes it mandatory.

Here is a thought . . . if you are going through the effort, then why not benefit from it?

What should you measure?

The “WHAT” is hard to answer unless you know the “WHY”. In other words, you should measure things relating to board engagement and performance if you want to improve those things. You should measure things relating to money and donor behavior if you want to improve your resource development.

One national organization with whom I am very familiar (wink, wink), developed an entire organizational scorecard full of key performance indicators (KPIs) that breakdown into the following five ares:

strategic growth
increased impact
financial health
resource development
board of directors

I know that a number of subscribers to this blog aren’t members of this “unnamed national organization,” and you are probably wondering what are some of the KPIs listed under these categories. While I don’t think I’d be violating any major trade secrets in sharing those KPIs with you, I want to be respectful of their work. So, I’ll only share a few of those KPIs to give you an idea and a start:

net change in number of clients service
average days cash on hand
net change in total income
percent of board volunteers that attended 75% of meetings
percent of board volunteers who make a personal unrestricted financial gift
percent of board volunteers who make a face-to-face solicitation on behalf of the agency

If you are interested in developing KPIs and a scorecard for your non-profit organization, here are a few resources I’ve found online that may help you:

Association of Fundraising Professionals: “Key Performance Indicators: Nonprofits Need Them, Too!“
Liz Marenakos of Blackbaud: “Identifying and Measuring KPI’s“
Virtue Center: “Brutal Honesty: Measuring Non-Profit Success with Key Performance Indicators“

What next?

I point you back to my inflammatory opening sentence:

“If you are collecting data on your non-profit organization’s performance and doing nothing with it, then you should be tarred and feathered.”

Collecting this data isn’t rocket science, but it is time-consuming and you’re too busy to invest that time and get nothing back in return. Right?

If you are measuring program-related KPIs (e.g. outcomes data, impact data, etc), then you should share that info with the staff responsible for those programs. If you are measuring fundraising-related KPIs, then you should share that info with your fundraising staff and fundraising volunteers. If you are measuring board engagement related KPIs, then you should share that info with board volunteers.

I believe all KPIs should be shared with all board members in all instances (but at the appropriate time and setting) so they understand whether or not the organization is healthy or unhealthy. I also believe that where possibly, KPIs should be directly tied to performance management systems and evaluation tools.

The big idea here is that collecting this type of data, sharing this type of data, and integrating this type of data into systems like employee performance appraisal and board evaluation will drive change because it creates urgency, accountability and the assessment information necessary upon which organizational plans can be built.

Has your agency developed KPIs? If so, how do you use them? With whom do you share your data? What has been the result? Please use the comment box below to share your experiences.

Here’s to your health!

Nonprofit board development is a process when done right

June 5, 2013 erik Board development, Board governance, organizational development, volunteers

board of directors3 The single most important thing an organization can do to ensure its sustainability is develop its board. You may be thinking — “No Dani, it’s staff, leadership, programming, impact or fundraising” — and all of those things are important, but none of them can happen the way they should without a strong board. Everything flows from a strong board of directors.

Strong boards set the mission, vision and values for an organization; they hire the talented and effective CEO and hold that CEO accountable for ensuring and implementing the strategic plan; they raise money, act as the fiduciary responsible agent over the finance and the programming; and they set policy. When it’s done right — like all good leadership — it looks like nothing.

Don’t be fooled, it’s not nothing and it’s not easy.

Board development is the intentional process by which the board is perpetuated, evaluated, and educated. It is usually stewarded by a committee that may be called Governance, Nominating, Administrative or Board Development, and it helps develop an effective board through its two main functions:

Board Building: A diverse board of directors (thought, skill, race, faith, ability, orientation, age, and gender) that is passionate about the mission of the organization is created through a board building process. That process includes an assessment of the current board and needed skill sets, identification of prospective members, and recruitment and nomination of new board members.
Board Education: Board members will fully understand and can effectively fulfill their commitments to the board of directors when a comprehensive orientation, continuing education, and annual evaluation process is in place.

The Board Development Committee outlines what the organization is looking for in a board member by analyzing current board make-up and identifying future needs, and finding the very best person(s) to meet those needs. In this identification process, the Board Development Committee informs the entire board of what the expectations are for board service.

The Committee reviews the prospects and sets a target number and priority listing of those they wish to bring on at the annual meeting. This list is presented to the board of directors for their comments. Any concerns are directed to the Board Development Committee.

In the absence of concerns, or after such concerns have been addressed, the prospective board member is contacted, preferably by a board member, a committee volunteer, or the person with whom the prospect is most closely affiliated, who requests a time to introduce the prospect to the mission of the organization.

I do not recommend you start the conversation inviting someone to join your board, or even share that you are calling to discuss potential board seats. I recommend you say that you are aware of their interest in the population your organization serves and you’d like to share some of your successes in positively impacting that population. (It may be necessary to assure them you are not setting up the meeting to ask for a gift.) You can decide once you are at the meeting if they are good fit for your board and if you should open the door to discussing a board seat; if not, you can find another way to engage them.

board recruitment

If you decide that you would like to invite them to be considered for a board seat, I recommend you communicate the time, financial obligation and effort expected of all board members before they agree to join.

Time is the principal commitment. Board members should be available at the time the board meets and be prepared to meet as often as is necessary to complete the business of the board during their term of service. They should also be prepared to attend fundraising events and to participate as fully as possible in developing and implementing the resource development plan.

I recommend you do not add someone to your board who cannot attend the meetings; either move the meetings or have them serve in another capacity. Organizations can only carry so many members who cannot attend meetings and most organizations already have a few people who fulfill that role.

Another primary responsibility of the Board of Directors is to ensure financial stability. Therefore, board members are expected to assist with fundraising efforts, as well as personally contribute. The financial health of the organization depends upon people-to-people contact, and prospective board members should understand that identifying and cultivating potential donors is part of their job.

Prospective board members are voted onto the board of directors in accordance with procedures laid out in the organization’s by-laws, which in Ohio are called Codes of Regulation.

Once voted upon, new board members should be oriented. I like to orient board member after they’ve been voted upon but before they’ve been seated. The orientation, either individually or as a group, should be conducted by the Board President, CEO, or Committee Chair. By the conclusion of the orientation, new board members should have a sense of the mission and programs, finances, fundraising initiatives, strategic goals, structure of the board of directors and staff, and their own roles and responsibilities as a member of the Board of Directors. They should also be invited to consider their own goals for service.

Once the Board has been appointed, the Board Development committee moves into its other two roles evaluation and education.

board evaluation

Evaluation is the process of assessing the progress of the board and identifying changes that will bring greater achievement of the organization’s mission. Evaluation is a developmental process, not a report card.

The Board Development Committee will ask individual board members to complete an annual self-assessment, including a section evaluating board process, which the committee will use to complete the board assessment. When a board assessment takes place, the Board Development Committee will compare the board’s individual assessments, identify areas of consensus, and develop a plan of action for strengthening the board.

This process can also include an opportunity for Board members to request trainings. Annual board education is integral to a successful board. There are a variety of training options, an example of some include:

The Art of the Ask
Board Process – agendas setting, committee, topics, strategy, structure, engagement
Basic Board responsibilities (fiduciary and legal)
Board vs Staff roles
Best Practices of Effective Boards
Governance as Leadership: Fiduciary, Strategic and Generative Modes of Governance

I encourage every organization to create a formal plan to annually assess, develop and grow their board. Strength begets strength and strong boards ensure strong, sustainable organizations.

As always, I welcome your experience and insight.

How much money should your non-profit have in reserve?

June 4, 2013 erik Board governance, Fundraising, organizational development, Planning

operating reserves Identifying blog topics can be hard. Sometimes you find a comfort zone and ideas flow freely. Other times, it is next to impossible and the writers block is crippling. So, I love it when readers sometimes email me on the side and suggest topics.

Yesterday, a reader did exactly that when she emailed me with the following request:

“Do you take requests? If so, I would love to hear your take on social service agencies that have more than 6 months of money on hand and the impact of that on fundraising.”

When I first read that email, I planned on squirreling the topic away for one of those days when topic ideas are difficult to come by. However, there was something about this topic that possessed me. I opened up a few Google searches, read a few white papers and blog posts, and found myself whipping out this post.

First, let me start with a very direct response to the question posed by the reader.

I have worked with a disproportionately large number of small non-profit organizations. Organizational capacity for these agencies is always an issue and the amount of cash on hand is typically very small. So, I’ve always advocated to CEOs and their boards that they put plans in place to build operating reserves equal to three to six months.

Only one client to my recollection every worked with more than a six month operating reserve, and I don’t think it impacted their fundraising efforts. If I were to speculate as to why that was, I think the explanation is simple . . . that agency did an excellent job with donor communications and made their case as to why operating reserves of that size were important.

Setting this one example aside, I do generally believe that building large operating reserves larger than 6 months or one year causes problems with donors. I say this because of everything Dan Pallotta writes in his book Uncharitable and how donors hold the non-profit sector to a different standard than the for-profit sector.

In his book, Pallotta talks eloquently about how for-profit corporations are rewarded by investors for generating profits, banking cash and growing organizational capacity. He contrasts this point with how donors punish non-profit organizations for doing the same thing.

For actual examples and a better explanation, I encourage you to read his book. I promise that it will be an eye opening experience. Additionally, you’ll likely walk away from the exercise and find yourself muttering the words: “Damn Puritans!”

In my clicking around and Googling, I found a number of interesting facts including:

Charity Navigator reserves its top ratings for organizations with 12 or more months of working capital.
The Nonprofit Finance Fund reported in its 2012 State of the Sector Survey that only one-fifth of survey respondents said they felt their donors were comfortable talking about operating reserves.
In 2011, more than three-quarters of non-profit organizations had less than 4 months of expenses in operating reserves (60% reported less than 4 months and 28% reported one month or less).

I strongly urge you to click-through and read more startling statistics on this and similar subjects at:

Executive Service Corp, “How Much in Reserve Funds Should Your Nonprofit Have?“
Nonprofit Finance Fund, “2012 State of the Sector Survey“
Nell Edgington’s Social Velocity blog, “A Financial Taboo Nonprofits Must Get Over“

I want to thank the reader who suggested this blog topic because they have caused me to change my thinking on this topic. From now on, when agencies ask my advice on what they should strive towards with regards to building an operating reserve, I plan on telling them . . .

12 months or more! ! ! !

With this Big Harry Audacious Goal (BHAG), the next words out of my mouth will be . . .

“Create a strong case for support or prepare to incur the wrath of donors.”

For those of you who don’t think this is possible, please take a moment to think about why that much cash on hand is important to your organization.

Many agencies are using their operating reserves as cash flow cushions as they wait for their accounts receivable from government grants. (Believe it or not some states are six to 12 months late in paying their bills.)
It is a sign of financial health to have operating reserves of this size.
One of the lessons learned from the recent economic recession is that larger rainy day funds are a necessity and not a luxury.
Stuff breaks and your organization needs to be in a position to fix the roof or replace a HVAC unit without running off to donors with an urgent case for support that sounds like a crisis or fire drill.

My advice to anyone who cares to hear it is:

Set a goal to increase your operating reserves to 12+ months
Work with the Finance Committee to develop a plan to achieve this goal (Yes, it will likely be a plan that spans many years). Perhaps, include in your plans to use a portion of your operating reserves to invest in organizational capacity building once certain targets are achieved.
Work with the Resource Development Committee to write a case for support that supports these actions.
Don’t hide from donors. Get out there and start talking to them. Weave the talking points from this new case for support focused on increasing reserve levels into your stewardship efforts. Donor engagement and education is the key to success.

So, I’m curious how many of you think I’m crazy? How big are your reserves? How big would you like them? What do your donors say about your reserves? Please use the comment box below to weigh-in on this discussion.

Here’s to your health!

“V” is for victory

May 30, 2013 erik Board development, Board governance, Fundraising, volunteers

One of my favorite training curricula that I’ve ever had the privilege of teaching is titled “Inspiring & Managing Your Board for Fundraising Success.” In that curriculum, there are nine keys to accomplishing what the title promises its participants. One of those nine keys is celebration & recognition, and it is the inspiration for today’s DonorDreams blog post.

As most of you know, I’ve spent the last 30 days working hard at hosting the Nonprofit Blog Carnival (which officially went live yesterday). Click here to see the carnival and all of its participants . . . you don’t want to miss this month’s carnival.

During the month of May, a few major milestones were achieved at DonorDreams.

We surpassed 34,000 all-time page views.
We achieved more than 1,000 all-time comments.
We eclipsed the 500 post mark (Phew, that’s a lot of content).
We hit an time high in daily visitors and page views during the last month.

I ask for your forgiveness as I take a moment to celebrate.

I know that for some of the big time bloggers out there, these might seem like small things to celebrate. However, DonorDreams blog has only been around for two years, and I am a staunch believer in celebrating the small victories along with the big ones.

Ahhhhhh, that victory lap certainly was sweet. Thanks for indulging me.

Now, let me take a moment to recognize those people who made it possible to celebrate.

YOU

That’s right. None of this would’ve been possible if not for you and all of the other DonorDreams blog subscribers, social media followers, readers and guest bloggers.

From the bottom of my heart, thank you very much for tuning in and reading this blog. Thank you for your comments. Thank you for your subscriptions. Thank you for your LIKES and RETWEETS.

This victory lap isn’t mine. It is OURS.

OK . . . I’m done (until the next milestone is eclipsed). 😉

With all of that being said, I would be remiss if I didn’t end this post with a thought provoking question:

“What do you do at your agency to celebrate and recognize achievement of milestones, goals, and successes with your board volunteers? Do you have any good examples that you are willing to share with your fellow non-profit professionals?”

Please mull this over for a moment and take a second out of your busy day to share your response in the comment box below.

Here’s to your health!

May 2013 Nonprofit Blog Carnival

May 29, 2013 erik Board development, Board governance, Fundraising, organizational development, technology, volunteers

Step right up . . . step right up! It is time for the May 2013 Nonprofit Blog Carnival.

You will be amazed by what many non-profit experts had to say in an open letter they composed to non-profit board volunteers.

What is even more unbelievable is how some of this month’s carnival participants were able to skillfully weave Dr. Seuss inspired ideas into their posts.

“Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not.” ~Dr. Seuss

Jeff Brooks at Future Fundraising Now wrote his letter to board members who don’t like your fundraising program. Did I mention how much he seems to like eating green eggs and ham?

The always positive and upbeat Marc Pitman (aka The Fundraising Coach) addressed the issue of board volunteers who are reluctant to fundraise. He included a neat link to a free asking styles profile tool at the end of his post. You gotta check it out!

On mBlog, Jenifer Snyder wrote her post to board volunteers on the value of getting more involved in mobile. I was especially impressed with this post because it is composed 100% in Dr. Seuss rhyme format. Big gold star for Jennifer!

Susan Chavez also earned a big gold star for writing her post in rhyme and offering social media advice to non-profit board volunteers.

Over at Wild Apricot blog, Lori Halley’s letter was written from the perspective of a new volunteer who openly wonders why veteran board volunteers sometimes resist new ideas and cloak themselves in the old fashion “that’s not how we do it here” defense.

Two Plus Two Can Be Five blog wrote their letter to board volunteers from the perspective of an ex-board volunteer who is one of those silent volunteers who has much to offer but never gets properly engaged. They ask the always powerful question: “Have you ever wondered why people resign from the board and move on like I’m going to?”

Sandy Rees at Get Fully Funded blog also took inspiration from a variety of different Dr. Seuss quotations. Her letter was written to new board volunteers and offered a treasure trove of advice on how to be a great non-profit board volunteer. She ends her post with an awesome training link that speaks to the topic of basic board roles and responsibilities.

Terri Holland wrote her letter from her own perspective as a fundraising professional. She ticks off four very common things that get in between boards and resource development staff, and she asks for their understanding and cooperation. This post is very honest and refreshing.

While not in the form of a letter, our friends at Big Duck blog offered “Three tips to help reinvigorate your board meetings“. This post reads like a letter to board volunteers. I included it in the Nonprofit Blog Carnival because I thought some of you might want to share it with your board governance committee and board president.

Love letters to board volunteers

One of my favorite bloggers of all time, Joanne Fritz at about.com, wrote “A Love Letter to My First Board of Directors“. Joanne undoubtedly speaks for all of us who’ve had the luxury of hindsight to look back at our past experiences.

Over at Non Profit Evolution, Dani Robbins also penned a love letter to her former board and exclaimed from the mountaintops: “I am the leader I am today because of the tools you gave me. I promise to pay it forward.”

At the Laramie Board Learning Project blog, Dr. Debra Beck penned an Open letter to an exemplar board expressing her appreciation to a board for allowing her to study their work, their learning processes and their motivations to serve (and serve well) for her doctoral dissertation research.

But wait . . . there’s more!

As many of you know, DonorDreams blog dedicated the entire month of May to non-profit professionals and volunteers who wanted to write anonymous letters to their boards.

There were a ton of great entries, and I encourage you to click over and start reading. However, for those of you with limited time for reading blogs, the following were the top six most popular posts:

Again, these submissions were not from bloggers. These letters were from real, live non-profit professionals and board volunteers. Their honesty is a window upon which you can see the things with which the non-profit sector struggles every day.

So what should you do next?

Dr. Seuss reminds us:

“You have brains in your head. You have feet in your shoes. You can steer yourself in any direction you choose. You’re on your own, and you know what you know. And you are the guy who’ll decide where to go.”

In yesterday’s DonorDreams post titled “I meant what I said and I said what I meant! ~Dr. Seuss,” I encouraged everyone who wrote letters (and those of you who have unwritten letters in your heads) to take it a step further and TAKE ACTION. Take a moment to click over to this post and give some consideration to what you’re next steps should be. Architects for change (as was Dr. Seuss) would consider this moment of reflection necessary if you plan on growing the organizational capacity of your agency.

Our fellow blogger Febe Galvez-Voth at www.thecaseforsupport.com might have summed it up best when she submitted the following Dr. Seuss inspired entry about developing your organization’s case for support (which I encourage you to read in a broader context of developing a case for addressing any of these board issues):

Wherever you are

State your case
On a bus in a fuss
Tell the world that you care
Tell the world why you share

State your case
In a chute in a suit
Make your smarts lead the way
Make your smarts sway the nay

State your case
In a home with a gnome
Speak with love and respect
Speak with love and connect

State your case
In a room with a broom
Lead away from the fray
You’ll go up, up and away

State your case!

“Today was good. Today was fun. Tomorrow is another one.” ~Dr. Seuss

OK . . . I am stretching this quotation from Dr. Seuss a little far. There is not another Nonprofit Blog Carnival tomorrow, but there will be another one in June (as there is every month).

Lori Halley at Wild Apricot blog will be next months host the next Nonprofit Blog Carnival. The theme will be “Data for Good“. Click here for more details and how to submit your blog entry for consideration.

As I say at the end of all my blog posts . . .

Here’s to your health!