fiduciary responsibilities – Page 6 – The Healthy Non-Profit

What won’t non-profits do to excite their board volunteers?

May 17, 2012 DonorDreams Board development, leadership, organizational development, Planning, volunteers

I ran across an awesome article while “Googling around” the other day. It was titled “Nine Keys for Reinvigorating Board Leadership,” and it was written by Paul Connolly, a Senior Vice President of TCC Group. While digesting this article, my mind first turned to those executive directors who I’ve seen in the last decade that actively try to disengage their board volunteers. After mentally traveling down that road (ugh … and it is an ugly road), I got more positive in my thinking and focused on all of the crazy things I’ve witnessed in the name of “board engagement”.

The following are just a few quick things I’ve seen over the years:

Of course, many organizations have turned to the good old fashion “mission moment” as part of their board meeting agenda.
How many “board retreats” have I seen organized all in the name of “engagement”? Ugh … too many!
One organization I worked with decided that social opportunities such as “Happy Hour” should be a part of their engagement solution.
I’ve heard some boards talk about putting together a mentoring program that hooks new board members up with tenured ones.
One organization I know even rented a trolley, loaded up its board volunteers and donors, and drove it from site-to-site as part of a facilities tour strategy focused on getting key stakeholders re-engaged in mission.
Oh yeah. You can’t forget about the “big conference” strategy where the executive director takes a board member (or a few) to one of those big inspirational conferences. When everyone returns, those board members are asked to “make a presentation” back to their fellow board members about what they learned. Hopefully, sparks of excitement ignite interest and activity.

Oh, the things I’ve seen. I could go on and on and on. I doubt that there isn’t anything an executive director, who actually wants an engaged board, would do to achieve this goal. Of course, when this topic of conversation usually comes up, there is an overwhelming desire to bypass “strategy” and go right to “tactics”

When I read the article by Paul Connolly, I had a moment of clarity because he didn’t go right to tactics. He focused on the following nine strategies:

Encourage board members to tell each other what motivates them to serve.
Educate board members about the organization and their responsibilities.
Hold the board accountable for its own performance and conduct a candid board assessment.
Compel the board to continually plan for the future and focus on results.
Infuse board meetings with more meaning.
Add some new board members and graduate some existing ones.
Nurture future leadership.
Develop a synergistic board-CEO partnership.
Consider alternative models for governance.

Ohhhhhhh! Ahhhhhhh! Has your curiosity been piqued? I know mine was. If you are intrigued and want to learn more about more deeply engaging your board volunteers, then I have two suggestions:

First, I strongly urge you to read Paul Connolly’s article “Nine Keys for Reinvigorating Board Leadership“.

Second, circle back here to DonorDreams blog and engage your fellow non-profit professionals in a discussion using the comment box found below. We can all learn from each other, especially if we share examples of what we’re doing and what has worked (or not worked) for us.

So, are you one of those executive directors who focuses on deepening board engagement? If so, why? If not, then why not? What things have you done or seen others do in the name of board engagement? Did Paul Connolly’s article trigger any ideas? If so, please share.

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

Who should be “driving the bus” at your non-profit agency?

April 19, 2012 DonorDreams Board development, leadership, organizational development, Planning

In my travels, I’ve seen hundreds of non-profit organizations, and I must admit that they come in all sorts of different sizes and shapes . . . Big ones, little ones, short ones, tall ones, skinny ones, fat ones . . . you get the picture.

However, one question has haunted me for as long as I’ve worked in the non-profit sector and it is the title of this morning’s blog post:

“Who is responsible for driving the bus?”

Yes, I’ve heard all of the “best practices” and expert advice. I’ve sat through too many training events. Heck . . . I’ve even been the trainer for a number of those training events and sounded very much like the expert on this subject.

However, this question still haunts me because I see everyone answering it differently.

For example, staff are obviously responsible for day-to-day operations, but who gets to decide:

Which programs get run?
What impact and program outcomes get measured?
What new BIG grants (that might require new programming and new things to be measured) should be written?

I suspect that many of you have answers for these questions. I also suspect that there are many different answers. Some of you might see this as a question of “micro-management” and others of you might see “policy implications” all over the place.

Many moons ago, when I worked at my local Boys & Girls Club, I was presented with an opportunity to apply for a very large state grant. Many of you have probably heard of 21st Century Community Learning Center grants (this opportunity is part of the federal No Child Left Behind legislation). When I was presented with this opportunity, these were some of the facts I was facing:

The grant (if received) would increase the agency’s budget by more than 25 percent,
We would need to open a new site by asking a local school to share some of their space with us after-school (aka new collaboration with memorandum of understanding spelling out responsibilities of all parties)
The grant would result in hiring more staff (e.g. increasing overall staff size by 25 to 50 percent) and serving more kids (expanding membership by approximately 25 percent)
The type of staff we were accustom to hiring would change because the school district obvious wanted us to hire their teachers (and pay them the after-school stipend rate negotiated in the collective bargaining agreement)
The grant would require some different programming and outcome measurements.
The grant also required that some serious thought be put into “sustainability planning”. How would we continue serving those kids after the five-year grant expired. How would we fund it? Where would we provide service?

I was in favor of applying for this grant. It was a game changer for the organization. However . . . how much authority did I have as the executive director to make this decision. Sure, at first blush, the question was simple . . . “Apply for this one grant? Or don’t apply?” . . . but one question leads to another and then another.

So, what parts of this decision belong to the board of directors and what parts belong to staff? AND what parts needed to be shared between board and staff? AND what happens if there wasn’t agreement?

In the end, I engaged the Program Committee and came to the table with my “case for change”. We talked about it, agreed on all fronts and made the recommendation to the board of directors. The grant was written. We were selected to receive funds. We signed the contract with the state board of education. And the rest, as they say, is history.

That was easy . . . Right? NOPE! Because I see everyone making similar decisions in very different ways. Why? Because it isn’t easy and every non-profit organization has a different culture with different levels of organization capacity.

Is there a RIGHT answer to this question? I think so.

I believe there are A LOT of policy questions wrapped up in aforementioned example, and all policy issues clearly belong to the board of directors. Additionally, I see grants the same way I see “contracts,” and every non-profit bylaws document that I’ve ever looked at has clearly stated that entering into a contract is the responsibility of the board.

So, why do I see so many non-profit and fundraising professionals working alone on identifying grant writing opportunities, writing the grant proposals and committing the agency to the terms of the grant agreement (or asking their board after-the-fact to rubber stamp the grant agreement)?

Why do staff let this happen? Is it because we really don’t want the headache of having to build consensus? Or is it because of time constraints? Why do boards let this happen? Is it because they don’t know what the right answer is and in the end would rely on staff to inform their opinion? Or is it that they don’t understand their roles & responsibilities as board members? Or is it simply lack of time? And regardless of how you answer these questions, does it really change the fact that there is a “right answer” to the big picture question and our responses to these smaller questions really just amount to nothing more than rationalization and justification for doing something we know is wrong?

Today’s post really does raise some serious governance issues that most non-profits of all sizes and shapes struggle with on a daily basis. Please scroll down and use the comment box to share your thoughts as well as examples of how your agency has dealt with this issue. We can all learn from each other.

Here’s to your health!

Should “We the People” be allowed to place failing non-profit agencies into financial receivership?

April 3, 2012 DonorDreams leadership

After dropping my partner off at O’Hare airport this morning, I drove back home listening to NPR’s “Morning Edition” when a story about the State of Michigan came on the radio. In a nutshell, Michigan has a law on the books that allows the state to “takeover” local municipalities who are failing and drowning in a sea of debt. This law gives the Governor the authority to appoint an “emergency manager” whose authority supersedes all elected officials in that community including the duly elected mayor and city council members. Of course, all of this is in the news because the City of Detroit is potentially the next target for takeover.

Many of you are probably wondering by now: “What does any of this have to do with non-profit organizations, donors, boards of directors and fundraising, which is what I typically write about every day?”

While listening to the pros and cons of this controversial law, I found my mind wandering back to non-profits and wondering “How would I feel about this if the story was about a failing non-profit agency instead of a failing local municipality?”

I think this is an interesting question. I even nibbled around the edges of this topic when I posted a blog titled: “Can a non-profit board contract out its management to a for-profit company?” back in September 2011.

Consider the following:

There are times when non-profit boards are ill-equipped to deal with financial crisis and end up making poor decisions in the board room that dig them deeper into debt.
Sometimes non-profit agencies hire executive directors who don’t possess the necessary skill sets to navigate the organization through such a financial crisis.
Non-profit organizations exist to provide services to people much like municipalities exist to provide services to citizens. So, a failure of the agency (as with the failure of a local government) impacts hundreds or thousands of people. Why should a failure of leadership on a few people’s part impact so many other innocent people who desperately rely upon the services provided (regardless of whether it is after-school programming or police/fire protection)?

I suspect that I have some people’s attention now. 😉 And some of you are now asking: “How could this Michigan law be adapted to a non-profit setting?” Well, what if the state passed a law that said any non-profit agency that runs a budget deficit for three years in a row must enter into a financial receivership arrangement with a third-party entity whose charge would be twofold: 1) restore liquidity and 2) minimize loss of services to clients.

Crazy idea? I am not sure. This is what the State of Michigan is doing with its failing municipalities. Why is this a good approach in Michigan and not a good approach for the non-profit sector?

Yes, I am being a bit of a “pot stirrer” today. But seriously . . . I think this is a topic worth talking about. Don’t you? After all, there are too many non-profit organizations who are on the verge of insolvency today, which means there are millions of American who rely on those services that could be adversely affected.

In the end, I suspect this boils down to a question about “freedom”. Right?

Do individuals have the right to fail in America even when that failure can adversely affect countless others? Or are we all our brother’s keeper and does it take a village to raise a child?

Hmmmmm . . . I hate it when NPR challenges my core beliefs like that. LOL Because before that story ran about Detroit, I would’ve told you that I didn’t think a Governor should be allowed to “takeover” a local municipality and override the will of the people when it comes to electing their neighbors to manage their community’s affairs.

After looking at multiple sides of the issue and applying it to other examples, I now think this issue is bigger and more complex than I originally thought.

What are your thoughts about whether or not failing non-profit organizations should be forced into financial receivership? Does your agency have the “right to fail” and end up affecting countless others who rely on you for service?

Please scroll down and use the comment box to weigh-in with your opinion.

Here’s to your health!

Erik Anderson

Owner, The Healthy Non-Profit LLC

eanderson847@gmail.com

http://twitter.com/#!/eanderson847

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http://www.linkedin.com/in/erikanderson847

Goldilocks and the three board members: Part 3

December 7, 2011 DonorDreams Board development, Planning, resource development

On Monday, I posted about boards who fail to review their executive director every year. On Tuesday, I posted about boards that get a little muscular with their executive directors and typically abdicate all of this to one overly aggressive board volunteer. Today, I’d like to finish our discussion by talking about what feels right to me.

First, let me say that I don’t think that there is a perfect process for creating an executive director’s annual performance plan or conducting their year-end evaluation. So, I thought that today’s post could just be a laundry list of things I’ve seen really good boards do and then you should weigh-in using the comment box with things you’ve seen that are particularly awesome. So, here we go . . .

The annual performance plan is rooted in the agency’s various written plans (e.g strategic plan, resource development plan, marketing plan, budget, etc)
The objectives in the performance plan are very measurable. So, much so that the executive director knows exactly what they need to do in order to move their evaluation score from a “meets expectation” to “exceeds expectation”
The executive director writes the draft performance plan, turns it over to a board committee (e.g. Human Resource committee), and after massaging the performance plan they take it to the entire board for input, discussion and approval. This way everyone has touched it and owns it.
The performance plan is completed and a final version is the executive director’s hands by the beginning of the year.
The HR committee asks the executive director for a mid-year update on how they’re coming along with their performance plan. Any red flags are brought to the entire board’s attention by the committee chair in executive session. The entire board engages in discussions such as: amending the performance plan, increasing oversight of the executive director, creating a corrective action plan, etc.
There are 360 degree feedback opportunities from both direct staff reports and the board of directors.
The annual performance plan doesn’t just look at “quantitative” success (e.g. fundraising goals achieve, membership targets hit, etc), but it also finds a way to blend into the evaluation “how the executive director” does their job. Do they use scorched earth tactics to get results (which will bite them later down the road) or do they do a nice job using best practices (which might not immediately translate into results but might pay big dividends down the road).
The year-end evaluation doesn’t have any surprises because it is based on the exact performance plan handed to the executive director 12-months earlier.
Just like the performance plan development process, the year-end evaluation starts with the executive director doing a self-evaluation. The HR committee makes adjustments and seeks input from the entire board.
The question of who sits down with the executive director and conveys the evaluation results rarely looks the same from organization to organization. I’ve oftentimes seen the board president do it, but I’ve seen the HR committee chair also do it almost as often. I’ve seen it done in a committee setting (but I must admit that it looked like someone was getting ganged up on). I think the board should recruit anyone they like as long as that person: 1) has a good working relationship with the executive director and 2) has a track record of having successfully done employee evaluations (e.g. they have some HR acumen).
The year-end evaluation is always signed by the executive director, and a board volunteer personally witnesses it being deposited into the employee folder.

I have always tried to live my life according to this simple HR rule:

If anyone is surprised throughout this process, then it wasn’t done correctly and there needs to be some serious changes heading into next year.

I am a firm believer that the annual performance plan and year-end evaluation of the executive director is one of the biggest keys to organizational success. If done right, everyone knows far in advance what is expected of them. If done right, there are no surprises and usually very little emotion in the process. If done right, everyone is on the same page and the organization is powered strongly into the future with everyone’s sights set on visionary goals and performance indicators.

So, how does your organization evaluate its executive director? Are there best practices that you think I missed? Please use the comment box below so we can all learn from each other.

I hope you agree that today’s “bowl of porridge” compared to Monday and Tuesday’s posts tasted “just right”. 😉

Here’s to your health!

Goldilocks and the three board members: Part 2

December 6, 2011 DonorDreams Board development, Fundraising, resource development

Yesterday, my post titled “Goldilocks and the three board members” talked about a very cold bowl of porridge that involves non-profit boards who fail to evaluate their executive director every year. In doing so, they set their agency up for failure, liability and <gulp> perhaps even personal liability if the D & O Insurance carrier deems coverage null and void because the board failed to make a “good faith effort” to carry out its fiduciary responsibilities.

Today, I would like to talk about that VERY HOT bowl of porridge. This, of course, is when a board goes way overboard with the annual performance plan and year-end evaluation.

In this scenario, the board president thinks they “own” the organization and take their leadership position way too seriously. They decide that their time at the helm of the ship will go down in the history books as the “Golden Age” of your non-profit organization. They see the executive director as a “direct report” and use the performance plan and year-end evaluation processes to micro-manage OR change behavior of the person occupying the executive director’s chair OR drive the executive director screaming from the room (so either they or a friend of theirs can take over).

If this seems far-fetched, please trust me when I tell you I’ve seen it happen more often than I care to admit.

It is typically true in my experience that the board member who is being very aggressive usually has some very legitimate issues. However, their aggressive approach makes them look like an egomaniac or a big jerk. Sadly, those issues never get dealt with because the focus becomes personal rather than organizational. As a result, the organization and the clients it serves end up the big loser.

The interesting thing I’ve seen is how the other board members in the room deal with this individual. The group usually tries to “pacify” and give them total authority to do whatever they want with the executive director’s performance plan or year-end review.

This “accommodating move” by the board is meant to shut the instigator up, but it never seems to work out that way. The annual performance plan and year-end evaluation resemble something straight out of a carnival fun house with those weird mirrors. Annual performance objectives turn out unmeasurable and read something like this:

Improve staff morale
Be a leader in the community
Move all of our accreditation scores up one level

It looks and feels really muscular and accountable, but when you peel the layers of the onion back nothing makes any sense. How do you measure improved staff morale? Is it realistic to focus on all accreditation categories (even the ones you’re already doing well in)? What is a leader and how do you determine that?

Next thing you know everything feels subjective. Feelings get hurt. Emotions run high. And the board volunteers who thought they solved the problem by “brushing off” the loud squeaky wheel in the board room, find themselves in a much worse situation. It always turns into a trust issue between the board and their executive director. However, it sometimes turns into impending legal action involving things like: harassment, hostile work environment, or retaliation.

Trust me when I say the really hot dish of porridge is not the solution. Please tune in tomorrow, and we’ll talk about what a normal situation might look like.

Have you ever been involved in a situation where one board member is really “hot to trot” about the annual performance plan or year-end evaluation for the executive director? Have you ever seen it turn out OK? Do you have any examples of just “horrible” performance plan objectives that just didn’t make sense?

Please share . . . we can all learn from each other.

Here’s to your health!

Goldilocks and the three board members: Part 1

December 5, 2011 DonorDreams Board development, Fundraising

I suspect we all remember the story of “Goldilocks and the Three Bears“. This porridge is too hot! This porridge is too cold! This porridge is just right! I’ve recently stumbled upon a very similar version of this story involving non-profit executive directors and board volunteers around the related concepts of annual performance plans and year-end evaluations. For the next three days, I thought it would be fun to look at each of the bowls of porridge and talk about the pros or cons.

Today’s bowl of porridge deals with when board volunteers shirk their fiduciary responsibilities and fail to evaluate their executive director.

I have run into a number of friends recently who confided in me that they haven’t been evaluated. In some cases, they haven’t been evaluated in a number of years. Of course, in many of these cases, it has become an issue because it is a tough time to be at the helm of a non-profit organization. As criticisms increase and board volunteers try to ratchet up accountability, up pops the ugly revelation:

“Ooooops, if things have been getting so bad, why haven’t you felt the need to evaluate me. We might have been able to make some course corrections if you had taken your fiduciary responsibilities seriously before we got to this point.”

The other side of this coin, of course, deals with the executive director’s annual performance plan (e.g. chart of work). In my experience, when executive directors aren’t getting evaluated, they typically don’t have a very well-defined performance plan with measurable metrics. This management tool is developed and handed to the executive director 12-months prior to their review. This way they know exactly what they need to do to succeed and how to proactively affect their year-end evaluation.

Again, in my experience, boards end up passing on the year-end evaluation because they didn’t do a good job of developing a performance plan, and now they don’t feel like there is anything concrete to measure their employee against. So, they end up taking a pass.

And the vicious circle continues until the non-profit organization skids into the ditch and fingers start getting pointed.

While it is easy to throw board members under the bus, I also want to hold my executive director friends accountable, too. Good non-profit professionals know how to support a board and keep them from falling down on the job. I’ve seen many non-profit CEOs pencil draft their own performance plans and year-end reviews and hold their board’s hand through these processes.

All of this also ties into fundraising and resource development. Rest assured that when fingers start getting pointed, donors ask tough questions and judgements get passed. Remember, the executive director is probably the face of your non-profit organization and many of your donors have likely fallen in love with this person.

I’ve seen it too many times. The organization fractures, accusations get made, donors ask tough questions, and everyone comes out looking bad. In the final analysis, public trust gets violated and donors put their checkbooks away until things get cleared up.

There is one cautionary word that I need to toss out there to board members about this very cold bowl of porridge. I know many of you think you don’t have any personal liability that comes with sitting on a non-profit board of directors because your agency purchased Directors and Officers Insurance. However, it is not outside of the realm of possibility that your D & O insurance company will not cover you in an employment related lawsuit if you failed to complete annual performance reviews of your executive director. It is foreseeable that the insurance company will say “there was a lack of a good faith effort” on the part of the board, and then you will be personally on the hook.

So, get off the couch and take that cold bowl of porridge to the microwave oven and warm it up before it is too late! For those of you who might be looking for a resource guide, click here for a great manual from The Enterprise Foundation. Tomorrow, we’re going to look at that next bowl of porridge which is way too hot. So please stay tuned.

Does your board of directors struggle with evaluating its executive director? If so, what strategies are you using to bridge this gap?

Please use the comment box below and share your thoughts. We can all learn from each other.

Here’s to your health!

Non-profits and Sunshine Laws?

December 1, 2011 DonorDreams Board development, resource development

Have you ever participated in an interesting conversation that inspired you enough to go do some research? Last night I had one of those moments, and what I found was so interesting I just had to share it with you this morning.

So, last night I was out enjoying a nice dinner with a non-profit board volunteer when the conversation turned to the subject of board meetings and how the local newspaper covers their agency.

He said, “Erik, the problem with making difficult discussions in the board room is that we’re subject to the Open Meetings Act.”

I said, “Really? I don’t think so. The Open Meetings Act is aimed primarily at government and public institutions.”

He responded with, “Erik, with as much government money as our agency takes, we are covered by this law and have to let the public and press into our meetings.”

If you know me well, then you know that not knowing an answer to something like this just drives me crazy. So, when I got back to my hotel room, I just popped open Google and started digging.

Ah ha! The first thing I found validated my point of view. The Illinois Open Meetings Act specifically exempts non-profit organizations. Click here to read more.

However, as with most things in life, nothing is simple or that clear cut. The next thing I found online was from Ann Taylor Schwing. She provided a dizzying number of bullet points pointing to various numbers of possible scenarios when the Open Meetings Act might extend beyond government entities and into board rooms of private organizations.

Click here to read more and see if your agency might fit into some these exceptions. After I consumed Ann’s work, my head started spinning and went into overdrive. For example:

One of the exceptions that Ann points out is: “whether the functions performed by the private entity would otherwise be performed by a public body, or were performed by the public body before the creation of the private entity“. Well, this certainly should give many agency’s a moment to pause and consider.
Another of the exceptions Ann highlights is: “the extent to which public entities may control the entity in question and the extent to which the entity is autonomous“. This got me to start counting the number of non-profits in my hometown who were recently quoted in the newspaper as saying, “If my city funding gets cut, we’re going to end up closing our doors.” As the Church Lady used to say on Saturday Night Live, “Well now. Isn’t THAT interesting?”

OK, you’re probably wondering what all this means and if it necessitates any action on your part. Here are just a few of my thoughts:

I would click the aforementioned links and do some research. No one wants to be surprised by a newspaper report or a disgruntled donor or client who demands access to your board room. I like to live by the general rule that “Prior Proper Preparation Prevents Piss Poor Performance”. 🙂
If the second bullet point sounds like it might describe your agency (e.g. your agency is so reliant on government money and your ‘independence’ is compromised), then you should engaging board members in a discussion around whether or not this is OK with them and what to do about it. After all, this is a quintessential “board governance” issue that the law calls on them to wrestle with. Right?
There is a bigger picture issue here as it pertains to non-profit transparency. You might want to start engaging board volunteers in a discussion around whether or not opening your board meetings to the public (e.g. donors, clients, neighbors, etc) is a good idea. And if it is, then how do you function in that public space and still get sensitive board business accomplished.

Some of you are probably thinking “Erik, are you crazy?” Well, maybe I am, but ask yourself this: “do donor have a right to attend governance meetings as an investor in your organization?” More to the point, I’ve seen some non-profit organizations model themselves after publicly traded for-profit organizations by hosting an annual meeting that is open to the public and is seen as a stewardship opportunity for donors.

Does your agency host an annual meeting that is open to donors and the public? If so, please tell us what it looks like and what is discussed in the comment box below. Has your agency ever been pressured by the press or the public about the Open Meetings Act? If so, please share with us what happened.

Come on folks! We can all learn from each other. Please take a moment to weigh-in.

Here’s to your health!

Nothing personal but you’re fired?

November 16, 2011 DonorDreams Board development

With the economy being what it is, I’ve sensed a very strange undercurrent in the non-profit sector recently. Fundraising is challenging for those agencies that have used fear tactics and guilt to raise money. Government dollars are drying up. Boards have been cutting-cutting-cutting and now there is close to nothing left to cut in their agency budgets. In a nutshell, things feel like they’re coming to a head and it feels intensely personal.

In the last 6-months, I’ve personally witnessed/heard about a few different staff-board encounters that has me very concerned:

A board president putting their finger in the face of the executive director during a heated discussion over budget cuts involving salaries and benefits.
An executive director flat-out yelling at the board (it was described to me as a temper tantrum) during the board meeting because they didn’t think board volunteers were raising enough money and were too focused on cutting-cutting-cutting.
A board volunteer yelling at a donor and leveling personal and hurtful accusations.
A group of board members coordinating their resignations and then running off to the newspaper to tell their story.
A board president secretly plotting to fire their executive director.

I get it . . . tough times lead to tough decisions and these decisions are intensely personal which mean they are riddled with emotion. However, the one thing everyone needs to keep in mind is that we all have FIDUCIARY RESPONSIBILITIES when we agree to work or volunteer for a non-profit corporation.

This means acting in the best interest of those who our organization’s mission calls us to serve. It means exercising the highest standard of care. It means putting personal interests to the side (which I think also includes setting aside personal agendas).

Exercising your fiduciary responsibilities does not mean engaging in emotional battles all in the “name of mission” with those whom you disagree . This slash-and-burn strategy is dangerous, destroys working relationships, and eats at the very foundations of our organizational. In the end, the people who really get hurt are those that we aim to serve — the client.

Here is a some advice that I recognize is easier said than done:

Board volunteers: Please remember that staff are people, too. They have families, mortgages, and a personal life just like you. You are charged with making tough decisions around finances, but a little compassion goes a long way and adding more emotion on top of an emotional bonfire only makes matters worse.
Non-profit CEOs and staff: Please remember that board volunteers are exactly that — volunteers. You were not hired into a lifetime position. Different situations call for different types of leadership, and this might be a time for a different leadership style at your agency. Don’t take it personal. A little bit of professionalism goes a long way.
Board volunteers: Times have changed and the economy we once knew blew up many years ago. There is a “new normal” that we need to get used to. This means changing your non-profit business model. It means rolling up your sleeves, fundraising, and asking people in your social circles to be philanthropic rather than sitting back and watching staff beg for non-existent government dollars. GET INVOLVED!
Non-profit CEOs and staff: Fundraising isn’t just a board responsibility. You play a huge role in supporting these efforts. It also isn’t something you can usurp from the board and do by yourself in hopes of making yourself indispensible. You are responsible for engagement of board volunteers. START ENGAGING!

Focusing on collaboration and consensus building is a start. Taking the personalities, egos and emotion out of decision-making is important. Keeping mission-focused is imperative in order to avoid hurting those we care about most — the clients.

What do you do as a staff person or board volunteer to keep emotions from getting too high during these difficult times in the board room? How do you keep perspective? Is it possible to extricate ego and personality from these discussions? How do you keep everyone focused on the client and mission?

This is an unusual blog post for me because it involves emotions and feelings; whereas, I normally write more fact-based stories blended with opinions. However, there are many of you and your non-profit friends going through some very difficult times, which is why taking 1-minute to answer some of these questions using the comment box below is so important. We can all learn from each other!

Here is to your health!

All non-profits are Penn State?

November 14, 2011 DonorDreams Board development, Fundraising, Planning

It has been a week since the Penn State child rape scandal broke, and I’ve been stewing in my emotions like most of you. There are so many aspects to this story, and it never dawned on me that any of these many storylines fit within the context of this non-profit blog until I read this quote from Moody’s in Forbes on Friday:

“Over the next several months, Moody’s will evaluate the potential scope of reputational and financial risk arising from these events. While the full impact of these increased risks will only unfold over a period of years, we will also assess the degree of near and medium term risks to determine whether to downgrade the current Aa1 rating. We will monitor possible emerging risks emanating from potential lawsuits/settlements, weaker student demand, declines in philanthropic support, changes in state relationship and significant management or governance changes.”

OMG . . . this story is so big that it blinded me to the fact that Penn State is a non-profit organization belonging to the higher education portion of the sector. Once this realization hit me, I saw the story from a whole different perspective. Here are some of the thoughts that ran through my head:

I wonder what it must be like for a board volunteer to sit on that board right now with all that liability hang over the university’s head?
I wonder what the fundraising professionals must be doing to prepare for and mitigate the impact this scandal will likely have on its resource development program?
I wonder what university staff must be doing to minimize the impact this scandal will likely have on volunteer, booster and alumni program recruiting?
How does a scandal like this affect the university’s strategic plan, and what are they doing to adjust their plans and factor in this new head wind?
How much money will this scandal cost the university in lawsuits, increased insurance premiums, philanthropic losses and an adjusted bond rating?

After processing all of these questions, it dawned on me that ALL NON-PROFIT ORGANIZATIONS ARE PENN STATE and this is a “clarion call” for all non-profit agencies to take action immediate!

Take action? Huh? What are you talking about Erik?

Regardless of how big or small your agency is, this scandal should strongly motivate you and your board to immediately take action on development of a crisis management plan. No one ever thinks that tragedy will strike. It is always something that happens to other non-profit organizations. And when it happens your world changes in a blink of an eye.

Penn State administration didn’t see this coming. One day they were on top of the non-profit world, and in a flash they are looking at a financial catastrophe (not to mention the human collateral damage done by the action and inaction of just a few men).

The non-profit organizations in Joplin, Missouri couldn’t have predicted a devastating tornado. One day their agency was there, and the next day they were gone.

The non-profit sector is naturally chaotic because most agencies are under-resourced. One person is typically asked to do multiple jobs. There never seems to be enough time to do those necessary capacity building things like preparing for future crisis. In a word, most non-profits are “reactive” and not “proactive,” which is typically our undoing when disaster strikes. So, take a moment to ask yourself these questions:

Is my agency’s Director & Officer insurance up-to-date? When is the last time we looked at whether or not we have enough coverage?
Who is our organization’s spokesperson in the event of a crisis?
Do we have a “crisis team” that can be activated in the event of tragedy? Are there a diversity of people on that team (e.g. lawyer, psychologist, PR professional, board members, staff, etc)? Do they know they’re on that team? When is the last time this group went through an orientation looking at the “what if” types of questions?
When is the last time staff reviewed your agency’s disaster contingency plans? Do you even have those plans in writing?

I encourage you to read this great blog post by Joanne Fritz at about.com titled “Top 5 Tips for Effective Nonprofit Crisis Planning“. It is a good to place to start as you use this national news story to motivate your board of directors to take action around developing a plan and putting systems in place to deal with whatever lurks ahead for you on the path of life.

Look at it this way . . . developing a crisis management plan could be a great cultivation or stewardship opportunity for certain fundraising prospects or existing donors to your organization.

If you look at this project as “one more thing that you don’t have time to do,” then it will be a burden and likely something that sinks to the bottom of your task list. If you look at it as an opportunity, then I suspect good things will happen for you and your agency.

Does your agency have a written plan? What is in that plan? How often do you review that plan? Is your plan posted online? If so, would you share that hyperlink with other readers of this blog so they can see a sample?

Please take a moment to answer one or more of these questions using the comment box below. It will only take a minute or two out of your very busy schedule and it could make a difference for another agency. If you don’t have time to comment, then click the forward button on your email and send this post to another non-profit professional who you care about and tell them that it isn’t too late to prepare for the apocalypse. After all, we can all all learn from each other.

Here is to your health!

Nothing up my sleeve! What about yours?

November 11, 2011 DonorDreams Fundraising

I started this week off by talking about government funding for non-profit organizations and how it might not be all that it appears to be. We transitioned mid-week into a discussion about executive compensation and now we’re ending the week totally focused on non-profit transparency. These topics are all related and go together as well as peanut butter and jelly. However, the issue of non-profit transparency still seems to be a murky subject for many of us including me.

What is transparency? How far should a non-profit organization go with transparency (e.g. should the executive director tatoo their salary on their forehead)? What are the best ways to share a large volume of organizational information if it wanted to be 100% transparent? I don’t know about you, but the more I think about this topic the more questions I seem to end up with.

I recently ran across a great blog post by GuideStar that dates back to November 2006. They asked their readers to define transparency, and I found a number of very interesting ideas. You should click the aforementioned link and read the post. Here is one of my favorite thoughts on this subject from one of their readers:

“. . . everything we do must be clearly understood and open to review and thoughtful discussion by all stakeholders to gain their complete confidence and respect.”

While getting a clear idea of what we’re talking about is important, it becomes equally important to wrap your arms around how to achieve organizational transparency. I’ve had a number of random thoughts about what I might do differently if I were on the frontline again as an executive director. Here are just a few of those ideas:

I would create a “transparency corner” of the agency’s website and post documents such as:
– most recent 990 tax return
– most recent financial audit and management letter
– a list of the agency’s Top 5 highest paid employees with their salaries and value of their
benefits package published
– board roster with contact information for each volunteer and a copy of the agency’s
whistleblower policy
– regularly updated program outcomes data and impact report
– updated financial dashboard that illustrates the current financial health of the organization
– most recent copy of the strategic plan along with a regularly updated scorecard that reports
on progress towards implementation
– if the organization is accredited, then a copy of the documentation from the last accreditation
visit (or if you’re a Boys & Girls Club a copy of the Club’s most recent SOE assessment from the national office)
– a list of government grants, program deliverable associated with those grants, program
outcomes data linked to those deliverables, and a way for the average citizen to contact the governmental agency
administering that grant to report questionable activity
Everyone seems to have a newsletter nowadays with an “Executive Director’s corner. I would focus every one of those “corners” on a different aspect of organizational transparency.
I would publish an “annual report” every year (even it is wasn’t glossy) and include a wide variety of transparency topics such as a list of people who support your agency; a thumbnail picture of how revenues and expense breakout; a snapshot of who the agency serves, a list of the organization’s biggest accomplishments in the last year; and much more.
I would produce and mail a quarterly “Community Impact Report” to ALL donors that answers the big picture questions of: “What are you doing with my money? What results is my charitable investment achieving? What have you learned and plan on doing differently?”

I am confident that this list can endlessly go on and on and one. So, I am going to stop here. However, I would encourage you to use the comment box below to answer one or both of these questions: 1) How do you define “transparency”? and 2) What additional transparency idea do you have that should be added to the list above (or what idea from this list should be removed)?

Please take a moment to weigh-in with your thoughts and opinions. It is just 60 seconds of your time and it could make a difference in another readers’ agency. Remember, we can all learn from each other.

Here is to your health!