Non-profit Governance: The Work of the Board, part 2

August 7, 2013 erik Board governance

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

Governance: The Work of the Board, part 2

Acting as the Fiduciary Responsible Agent

By Dani Robbins

fiduciary2 Welcome to part two of our five-part series on Governance. The first post reviewed the Board’s role in Hiring, Supporting and Evaluating the Executive. Today, let’s discuss the Board’s role as the fiduciary responsible agent, which is quite different from the fiduciary mode outlined in my favorite Board book Governance as Leadership and summarized in The Role of the Board. Fiduciary responsibility is one of the 5 pieces of the fiduciary mode, which is where governance begins for all boards and ends for too many.

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

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

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

What it means to meet your fiduciary responsibility is:

It is the Board’s role to:

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

What that means is:

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

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

audit4 The audit is prepared by an independent accounting firm in an effort to assess if the organization is operating in accordance with Generally Accepted Accounting Principles (GAAP) and also within their commitments. Different audits are required based on the amount of government funding that is received. The costs of such audits vary depending on the budget size, revenue streams, and also the quality of the financial systems and the need to for the auditor to clean up those systems.

Audits should be bid out, in conjunction with organizational policy, every few years. The auditor that is selected should conduct the audit and also come to the Board meeting to present their findings and answers any questions that Board members may have.

Auditors also prepare and should explain a management letter which includes suggestions on improvements that could be made. Such letters didn’t used to be, but are now regularly requested by funders so it is imperative the Board is aware of what’s included within and have discussed the ramifications of accepting, and also not accepting the recommendations.

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

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

mission Finally, as part of meeting their fiduciary responsibility, the Board should understand how the programs tie to the mission, the number of people served in those programs as well as the impact of that program.

This does not mean the Board needs to be –- or even should be — in the weeds of programming.

It is the CEO’s responsibility to ensure the program’s creation, implementation, management and evaluation. It is the Board’s responsibility to understand how such programs are aligned with the mission and the vision of the organization, the impact of that program on the clients your serve as well as the number of people served by those programs.

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

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

Non-Profit Governance: The Work of the Board, part 1

August 6, 2013 erik Board development, Board governance, volunteers

Governance: The Work of the Board, part 1

Hiring, Supporting and Evaluating the Executive

By Dani Robbins

As mentioned in Board Basics and reposted on this very site “Boards are made up of appointed community leaders who are collectively responsible for governing an organization.” That includes:

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

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

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

What that means is:

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

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

Growing, turning around or maintaining an organization require very different skill sets. Which trait do you want your new leader to have? Does your leader need to be a subject matter expert? Does she need to be local? Does he need to be a fund raiser, an operations person or both?

I recommend a search, REGARDLESS OF . . .

if there is a good internal person,
if someone on the board wants the job, or
if there is an obvious heir apparent.

Do a search, let everyone apply and see who best matches your needs. For more information on conducting a search, please click here.

Once your hire an Executive Director, s/he needs to be supported. Supporting an Executive Director is where the rubber meets the road.

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

Communication is key: the Board needs to know (and approve of) what the Executive Director is doing and the Executive Director needs to know (and be willing to do) what the Board wants.

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

The vast majority of Executive Directors rarely get evaluated, and when they do it’s often because they asked for an evaluation. (To the Board Presidents out there: Executive Directors, just like Board members and most other people, when left to their own devices will do that they think is right. What they think is right will not necessarily be aligned with what the Board wants, especially if what the Board wants has not been discussed or communicated. It also may not be aligned with anything anyone else is doing. See the Strategic Plan link above to create alignment.)

Executive Directors should be given expectations and goals (just like all other staff) and should be evaluated against those expectations and goals every year. There should be a staff (including executive) compensation plan that has a range for salaries for each position and reflect comparable positions in your community; raises should be given within the confines of that plan, or the plan should be revised. (More on that in the Setting Policies blog to come in the next few days.)

Hiring, Supporting and Evaluating the Executive Director has to happen – in full- for your executive to be an effective leader, for your board to fulfill its responsibilities and for your organization to fulfill its mission.

When an Executive Director is hired right, supported appropriately and evaluated effectively there’s no end to the impact it can make on an organization and a community.

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

“I meant what I said and I said what I meant!” ~Dr. Seuss

May 28, 2013 erik Board development, Board governance, volunteers

For those of you who regularly follow DonorDreams blog, you know that for the last month I’ve been publishing real letters from real non-profit people. These letters have been anonymous and all center on the theme of things that non-profit boards do that drive the letter writer a little nuts. Rather than just making this a good old fashion “rant,” each author was asked to incorporate a suggested solution into their letter.

I hope you enjoyed this month’s series. If the data analytics for this site are any indication, it looks like many of you enjoyed it A LOT!

As you can see from all of this month’s posts, I incorporated a “mask” theme for a few reasons.

This theme was inspired by the fact that I am the Nonprofit Blog Carnival host this month, and I thought incorporating masks as a visual would tie the ideas of “carnival” and “anonymous letters” together perfectly.
Additionally, humans have used masks for an assortment of things for millennia including ceremonies, protection, medical protection from plagues, disguise, and performance.

Interestingly, I’ve been on an Alaskan cruise for the last two weeks (I just got home last night), and everywhere I turned in all of the gift shops I encountered native Alaskan masks. So, for your enjoyment, I snapped a whole bunch of pictures and included them at the bottom of this post for your enjoyment. (Keep scrolling down below my signature block to enjoy those pictures)

Tomorrow is Wednesday, May 29th, and it is the day we’ve all been waiting for. Tomorrow is the day we celebrate the Nonprofit Blog Carnival. As you know, I asked the nonprofit blogosphere to consider writing an open letter to non-profit boards about something concerning to them along with a suggested solution. I also challenged them to incorporate something from Dr. Seuss into their post because this iconic children’s author is considered by many people to be an “architect of social change“.

If you couldn’t tell, I am hoping this month’s series of posts culminating with tomorrow’s Nonprofit Blog Carnival will become a blueprint for “change” regarding how you engage your non-profit board on a variety of issues.

I titled this blog post with an inspirational quotation from Dr. Seuss that I believe sums up this entire exercise.

“I meant what I said and I said what I meant!“

Now that we’ve got whatever it was off of our chest, I encourage you to shift your thinking to the following questions:

What will you do about it?
How will you tactfully engage your board in addressing the issue you’ve identified as critical?
Can some of these issues become generative questions and conversations that get incorporated into your board meetings?
Do you have a board governance committee that does more than just recruit new board volunteers? If so, what is their role in addressing some of these issues?
How can you use this exercise to develop a system focused on continual organizational improvement?
Have you given any thought to asking your board volunteers to write anonymous letters to you with suggestions on how to improve aspects of your job?

I hope you’re looking forward to tomorrow’s Nonprofit Blog Carnival hosted here at DonorDreams blog. I’ve seen the submissions, and I’m hopeful that you will enjoy them as much as I have. In the meantime, please start thinking about the questions I just posed and use the comment box below to weigh-in with your thoughts keeping the following quotation from Dr. Seuss in mind:

“Step with care and great tact. And remember that life’s a great balancing act.”

Here’s to your health . . . See you tomorrow at the carnival!

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

If you are a lover of this kind of art from the Northwest coast, then I suggest you visit Hill’s Native Art online to check out their large selection.

Dear board volunteers . . . let’s get on the same page, please?

May 27, 2013 erik Board development, Board governance, volunteers

DonorDreams blog is honored to be hosting the May 2013 Nonprofit Blog Carnival. The theme this month is “Dear board volunteer . . .” and the idea is “If you could write an anonymous letter to a nonprofit board about something they do that drives you crazy, what would that letter look like and what suggested solutions would you include?” If you are a blogger and would like more information on how to participate and submit a post for consideration, please click here to learn more.

I wanted to expand the Nonprofit Blog Carnival concept in May. So, I reached out to real non-profit professionals and asked them to also write an anonymous letter to their board volunteers. These people are executive directors, fundraising professionals, board members, donors, community volunteers, consultants and front line staff. I promised everyone anonymity in exchange for their submissions.

We will celebrate May’s Nonprofit Blog Carnival on Wednesday, May 29, 2013. Up to that fun-filled day, I will publish real anonymous letters every day from real non-profit professionals right here at DonorDreams blog.

I hope you enjoy this real look at real issues that our community deals with on a daily basis.

Here is today’s letter:

Dear Board Volunteer:

Together, we share a partnership. We are in this together.

I realize that you can only devote a portion of your life to our mutual cause and that it is my full-time responsibility, and then some. I am mindful and respectful of your time, and I hope that likewise you are respectful of mine. However, if and when (probably more like when) we are in “crisis mode” when we need each other, then we are available for one another regardless.

Our relationship needs to be one that is open, honest, and brutally frank. We both want the best for our organization and we both work hard to achieve excellence. I will always tell you the absolute truth, never hiding any information or embellishing it on all topics. I expect the same from you.

I can’t do the job by myself. I rely on our staff and I also rely on you as well as our other volunteers to make it work. Working together collaboratively gets a lot more done and in faster time.

If you’ve had issues as an organization before I got here, don’t expect that just by hiring me that the problem will all quickly go away. I know how to fix them, but I will need your support and the staff’s support to really get the job done — and it will take time because we are dealing with a cultural change of doing things differently to improve the results. Some “sacred cows” will have to be slaughtered along the way and not everybody will be happy, but the organization will be stronger in the end as a net result.

You are paying for my leadership, experience, advice, and expert counsel. Please pay attention and follow my recommendations to help improve the organization. These recommendations are based on years of experience, sound business principles, and best practices.

Our board should be composed of people of influence and affluence. We can have other groups that are “working groups”, but our board needs to be the absolute top of the community power structure for our organization to thrive. If we have a board composed of less than that, then we will not be maximizing our organization’s full potential.

My view is that the board establishes a vision for the organization, oversees its governance, approves an annual budget, raises funds for the organization, and employs the Executive Director. The staff is hired by and reports to the Executive Director to execute the plan for the organization. The staff runs the day-to-day operation of the organization within the confines of the established budget and resources. The staff does NOT report to the board, but to the Executive Director.

There will come a time when we disagree with one another on something important. To the best of our abilities, we will do so privately, iron out those differences behind closed doors, and then come out publicly with one agreed upon course of action.

Thank you for being a board member of our great organization!

Best regards,
Your Executive Director

If you have some advice for the author of our anonymous letter, please share it in the comment box at the bottom of this post in a respectful manner. If you want to submit an anonymous letter for consideration this month, please email it to me at the address in your signature block below. If you are a blogger looking to participate in this month’s Nonprofit Blog Carnival and want to learn more, then please click here.

Here’s to your health!

Dear board volunteers . . . I’m sorry about so very much!

May 14, 2013 erik Board development, Board governance, Donor-centered fundraising, Fundraising, volunteers

I wanted to expand the Nonprofit Blog Carnival concept in May. So, I reached out to real non-profit people and asked them to also write an anonymous letter to their board volunteers. These folks are executive directors, fundraising professionals, board members, donors, community volunteers, consultants and front line staff. I promised everyone anonymity in exchange for their submissions.

We will celebrate May’s Nonprofit Blog Carnival on Wednesday, May 29, 2013. In the meantime, I hope you enjoy this real look at real issues that our community deals with on a daily basis.

Here is today’s letter:

Dear Board Members,

Over the last several years, we have accomplished much together. Our budget has nearly tripled, we serve nearly twice as many youth, and the community recognizes us as an effective and trustworthy not-for-profit. Despite our great successes, we certainly could have done more.

Rising short of our full potential, there are some things I need to share with you.

First, I am sorry that many of you came on the board and were not adequately engaged in the work of the board. Far too many of you just simply coasted along without more regular contact from me or the board leadership team. We wasted your potential.

Second, I am sorry that so many of you were not more thoroughly cultivated before you were brought on board. Far too many of you needed to be exposed to the message and the mission before you were brought on board. We didn’t stoke your passion and develop your commitment near enough.

Third, I am sorry that many of you were brought on board (and this is really hard to say) and never should have been invited in the first place. Too many times, we were bringing people on who just lacked the connectedness within our community. Too many times we were bringing people on who lacked the passion, lacked the ability to work as a team, or lacked the wisdom of life that could make all the difference. We brought you into a situation that set you up for failure.

Fourth, I am sorry that we have not committed enough time to exploring and understanding the board-staff relationship. The challenge of making sense of this complex relationship demands that we spend more time researching and examining best practices, adding to our wealth of knowledge and molding a strategic direction. We owe it to ourselves, our organization, our donors and our members, to become the most effective team possible. To date, we continue to find our “sweet” spot. We need to do more.

Lastly, I look forward to our coming years together. Like the members we serve, we have great potential for growth. So much has been done in such a short time. So much more needs to be done.

Let’s move forward having learned from our recent success, striving to realize our full potential.

Most Sincerely,
I’m sorry . . . so very sorry!

If you have some advice for the author of our anonymous letter, please share it in the comment box at the bottom of this post in a respectful manner. If you want to submit an anonymous letter for consideration this month, please email it to me at the address in your signature block below.If you are a blogger looking to participate in this month’s Nonprofit Blog Carnival and want to learn more, then please click here.

Here’s to your health!

Dear board volunteers . . . please do a better job with your recruitment efforts

May 13, 2013 erik Board governance, Fundraising, volunteers

We will officially celebrate May’s Nonprofit Blog Carnival on Wednesday, May 29, 2013. In the meantime, I hope you enjoy this real look at real issues that our community deals with on a daily basis.

Here is today’s letter:

Dear Board Volunteers,

Why ME?

After years of on again, off again volunteer work in the community, I was recently asked by a local not-for-profit to be a part of their resource development committee. Planning, strategizing and fundraising have always been kind of a natural for me, so I eagerly accepted the challenge. And what a challenge it turns out to be…

Getting involved with the organization was enlightening. I met a lot of great people who had many terrific ideas. There seemed to be an early interest from the RD committee in meeting and discussing these ideas, although it became readily apparent that the follow through was a bit lacking. It also became apparent to me that there are several types of people, or bees, that flock to the not-for-profits: Executive bees, Worker Bees, and Busy bees.

Now some explanation: The Executive bees, or E-bees are the the group of power brokers that get involved with the not-for-profits. These are people in the community that have influence, wield formal authority, and are typically respected by their peers and fellow board members. The E-bees guide or drive policy, typically bring some fundraising ability to the table, but aren’t going necessarily roll up their sleeves and get their hands dirty. They definitely bring value to a not-for-profit.

So, the Worker bees, or W-bees, are still respected by their peers, this is the group that will roll up their sleeves and get their hands dirty. Want to be able to spot a W-bee in a crowd? It’s not too tough. Go to the next big event. Look for the board members that are setting chairs or moving tables. Take a picture of the board member walking around selling the raffle tickets at the event. I’ll bet that you just found yourself a Worker bee. Don’t worry, these are helpful bees to have around, in of course the right mix.

Now the Busy bee, or B-bees, are are interesting creatures, and they can be a little harder to identify. B-bees, like the name implies, kind of roll around and oftentimes wind up in the mix with the E-bees and W-bees. Often, they feel that they may have influence when in fact they have very little. They may talk a good game, but their lack of follow through and lack of willingness to commit doesn’t make them a very good Worker bee. B-bees like the activity found in the rest of the swarm but aren’t necessarily going to bring much to the table. It has been my experience that Busy bees are responsible for the flurry of inactivity that occurs in not-for-profits. Be careful when dealing with a Busy bee, because like all bees, they still have stingers. And because of their lack of focus on the real issues at hand, they are always slightly more inclined to use those stingers than the E-bees or W-bees. These bees often bring little to the hive and can be more bother than they are worth

OK, so why all the bee analogies? Simple. In order for not-for-profits to be successful, here has to be a healthy synergy with a good mix of the right type of volunteers. People all have to work together. And there has to be the right mix of people to make all of that happen. Like a beehive. Ultimately, of course, it the responsibility of the Board and the Executive Director to ensure that brought proper board development brings the right mix of volunteers together.

Recently, one of the current board members met with me and explained that there had been some transition, and that there several vacancies on the board. He was very excited to meet with me, and after only a few short minutes of conversation asked me “would you like to be on the board?“

I smiled and asked if he was serious. I didn’t ask because because I was flattered by the offer, but because I was so taken back by the way he asked me. This was a Worker bee, who is very involved, very well intended, but had put no thought into why he asked me.

When I asked him why he was so interested in recruiting me he said that it was because: 1) he liked me and 2) he liked some of the work I had done on the resource development committee. I cringed. This, I thought, is the exact reason that the board is in the trouble that it is in.

Boards and execs must make board development a number one priority. There has to be a defined methodology to volunteer recruitment, and it has to have a basis beyond choosing friends and picking the “nice guys”.

Pick a strategy and pursue it.

How many E-bees should your board have? How many W-bees does the board need? Fundraising should be a key component to choosing board members. If prospects can’t fundraise, they may be better served working the beverage cart at the next golf outing. How will you deal with the Busy bees? Does your board have the stomach to truly self-evaluate, and then ask its members annually why they are there? If not, be prepared for a hive full of Busy bees, and be willing to accept the problems that B-bees bring.

When new members are solicited, tell them why they were chosen. It may be their ability to raise money, their position in he community, or their exceptional skills as a Worker bee. By identifying and sharing their desirable traits, you’ll make the board and volunteer recruitment process much easier. Volunteers and board members will have a defined sense of purpose.

Most importantly, you’ll never put a volunteer in the position of asking themselves “Dear Board, why ME?”

Sincerely,
The Honey Bear of Volunteers

If you have some advice for the author of our anonymous letter, please share it in the comment box at the bottom of this post in a respectful manner. If you want to submit an anonymous letter for consideration this month, please email it to me at the address in your signature block below.If you are a blogger looking to participate in this month’s Nonprofit Blog Carnival and want to learn more, then please click here.

Here’s to your health!

Dear board volunteers . . . I can’t do this all by myself.

May 9, 2013 erik Board development, Board governance, Fundraising, Planning, volunteers

I wanted to expand the Nonprofit Blog Carnival concept in May. So, I reached out to real non-profit people and asked them to also write an anonymous letter to their board volunteers. These people are executive directors, fundraising professionals, board members, donors, community volunteers, consultants and front line staff. I promised everyone anonymity in exchange for their submissions.

We will celebrate May’s Nonprofit Blog Carnival on Wednesday, May 29, 2013.

I hope you enjoy this real look at real issues that our community deals with on a daily basis.

Here is today’s letter:

Dear Board Volunteers:

First, let me say that I truly appreciate all the time, talent and treasure you give to our organization each year. That said, I must air my concerns regarding some practices that I see as undermining the functioning of our board and the ultimate success of our committees and fundraisers.

We have board committees designed to do work outside of the board meetings and then provide a written report to include in our board packet for review/approval at meetings. These committees are not functioning according to their design and reports are not being completed or submitted. As a matter of fact, few committees are even meeting unless I force the issue. Then I must type up the notes and follow-up on what is to be done.

New board members are learning the wrong way for committees to function. We developed the committee structure through a well thought out process….let’s use it.

You are all aware that we do not have a development person. So, it falls to me or the office manager to complete the tasks that you do not. While I understand that you are all busy, each committee chair could recruit community members to help with their committee. You can delegate and assign work to those folks. You can also check on your committee members completion of assignments.

Call/email/text your committee to stay in touch and remind them of their commitments. Get the job done!

When I am doing committee work, I am not doing the following:

writing grants,

completing billing or grant reporting,

marketing the agency, or

managing our staff and programs.

My job requires 50 hours a week to just keep my head above water. When I take on these other tasks, I am drowning.

I have no problem putting in the 60-70 hour weeks just before a fundraiser, but I cannot do this week in and week out in order to balance my every day responsibilities and those of the various committees. We need to work together to ensure the success of our organization.

With each board member renewing their commitment to their chosen committees, we can guarantee the success of each committee and fundraiser, so please do your part.

Let’s start this year with a great attitude and renewed motivation.

Sincerely,
One sleep deprived exec

If you have some advice for the author of our anonymous letter, please share it in the comment box at the bottom of this post in a respectful manner. If you want to submit an anonymous letter for consideration this month, please email it to me at the address in your signature block below.If you are a blogger looking to participate in this month’s Nonprofit Blog Carnival and want to learn more, then please click here.

Here’s to your health!

Should we compensate our non-profit board volunteers?

April 29, 2013 erik Board development, volunteers

Those of you follow this blog know that I’ve been unpacking old boxes of “stuff” in my basement for the last few weeks. There is a small mountain of boxes from my last place of residence. It is stuff that was deemed unimportant at the time of unpacking, but important enough (for whatever reason) not to throw away. As I’ve encountered old non-profit training materials and memories, I’ve shared some of it here at DonorDreams blog.

Last night, I rummaged through another two boxes in an effort to get ready for garbage day on Monday. As I unpacked and recycled more stuff, I came across a March 2004 edition of BoardSource’s “Board Member” magazine. The cover story was titled: “At What Cost? The Board Compensation Debate.” James Orlikoff wrote the proponent article “Yes! In the Accountability Era, Board Members Must Be Paid.” Kevin Murphy wrote the opponent article “No! Paying Boards Is a Solution in Search of a Problem.”

I remember reading this pro-con piece almost a decade ago and I found myself firmly in the “Heck No!” camp. However, I’ve softened over time and enjoyed re-reading this article last night (especially because it took me away from the job of unpacking boxes . . . LOL).

Here is the thesis of Orlikoff’s proponents argument:

“In today’s challenging, complex, and litigious environment, board compensation may soon emerge as a key component of effective governance.”

Here is the thesis of Murphy’s opponents argument:

“. . . compensating board members not only undermines public confidence in the sector, but also begins to erode the underpinnings of our governance system. The media attention to compensation scandals makes one thing clear: With board member compensation, the potential abuses outweigh the potential benefits.”

One reason for my recent defection from the opponent’s camp is that I see many municipalities compensating their city council members. In my hometown of Elgin, Illinois, a citizen who gets voted onto the council received a $1,000 monthly stipend, the ability to participate in the city’s health insurance program, and a few other small perks.

I honestly don’t think the issue of compensation undermines public confidence in our municipal institutions, and I don’t see any erosion to the underpinnings of the governance system. In other words, I am looking at an empirical example and don’t see any evidence of what the opponents to board compensation argue.

Sure . . . the city of Elgin is not a non-profit board of directors, but it also isn’t a for-profit board either.

So, let’s look at a handful of arguments put forth by the proponents:

A lot is asked of non-profit board members, and compensation is a way to reward such work and create an incentive to do a quality job.
For-profit board members are compensated, and non-profits might need to start doing the same thing in order to compete.
Adding compensation to the picture might contribute to a more rigorous board recruitment and evaluation process.

Orlikoff ticks off 10 reasons for compensating non-profit board members, and after reading each argument I find myself shrugging my shoulders and saying “Hmmm . . . maybe.”

However, in my opinion, I am left wondering if compensation might change the dynamics around “engagement” of non-profit board members.

While I have not yet formed an opinion, if someone could show me that non-profit board members would be more engaged in activities like fundraising, financial management and board governance issues, then I might joyfully jump into the proponent’s camp.

I know that some of you might be scratching your heads right now thinking it is illegal to compensate non-profit board members. The simple answer is that it is not illegal to do so. It is just a little more complicated.

According to this BoardSource article, two percent of non-profits currently pay their board members (mostly large and complex organizations), and 25% of foundations pay their board members. Joanne Fritz at about.com answered this question in her post titled “Can a Nonprofit Compensate It’s Board Members?”

So, here I sit again in the middle of a good debate. While I understand board compensation alone won’t improve non-profit board governance, I am left wondering if it isn’t part of the solution.

What are your thoughts? Would adding a small stipend create a change in recruitment efforts? Year-end evaluations? Meeting attendance? Committee meeting attendance? Fundraising? Engagement? What are some of the problems we might create by opening this ‘can of worms’?

Before you share your thoughts in the comment box below, please consider the following quote from American business man James Casey.”

“The basic principle which I believe has contributed more than any other to the building of our business as it is today, is the ownership of our company by the people employed in it.”

I dunno . . . let’s talk about it. Here’s to your health!

Non-profit boardroom diversity includes a man named Thomas

April 3, 2013 erik Board development, volunteers

Easter was just a few days ago, and I still have things like fake basket grass, plastic eggs, and empty calories on my mind. I’ve also been working hard at turning leftover ham into split pea soup. Apparently, other bloggers have Easter on the brain because I just read a great post titled “Who’s Your Thomas?” that Tom Okarma posted on the Fox West Philanthropic Network’s LinkedIn discussion board. I loved this blog post because it was better than anything the Easter Bunny brought me . . . it was the gift of “AH-HA”.

As you probably get from the title of the post, Tom talks about the value of having a board volunteer who is not a rubber stamp. In fact, this person actively doubts all sorts of things that your agency is about to undertake. They express their concerns. They ask questions . . . lots of them. They share what they believe is the “unvarnished truth” regardless of whether or not the timing is convenient.

When I was on the front line, my Doubting Thomas was a board member named Lee.

I wish I could tell you that I used Lee’s talents appropriately, but I cannot. I worked hard to silence him, and more than a decade later I now see how wrong I was.

Gosh darn it . . . hindsight really is cruel. LOL

Guarding against the rubber stamp

I cannot count how many times I’ve seen a group of people sit around a table, discuss an issue, and look like a bunch of bobble-head dolls. Let’s face it. People are busy and on any given day we can get distracted and fail to focus on the business at hand.

If you have “Board Member Thomas” sitting around the table, the odds are much higher that the bobble-head dolls might bobble at a slightly slower pace and fewer mistakes/oversights might be made.

Improving the decision

One of the things I’ve seen work when it comes to satisfying “Board Member Thomas” is answering their questions. This usually entails more than just verbally telling them what they want to know. It almost always involves data, reports, and documents. After receiving these things, it also almost always involves discussion, discussion and more discussion.

In the end, this information and discussion results in better boardroom decision-making.

Too much of a good thing is always bad

On a few occasions, I’ve had the privilege of being in a non-profit boardroom full of Doubting Thomas board members. Just thinking about those few experiences still sends a chill up my spine. LOL Would you be surprised if I told you those boardrooms brought the expression “paralysis by analysis” to life?

There are two important points that need to be made here:

Diversity is about more than just age, gender and ethnicity. It includes all kinds of other factors: profession/occupation, personal and career experiences/successes, social networks, and . . . yes . . . personality types (e.g. Doubting Thomas).
The funny thing about diversity is that if you over-pursue one thing, then you end up losing your diversity. Target too many Millennial and GenX board prospects, and you end up with a young and ineffective board. If you recruit too many Doubting Thomas board volunteers, then you end up with grid lock. So, tread carefully!

Do you have a Doubting Thomas on your board? How do you manage that asset? How do you work with your board development or governance committee to identify and target such a board prospect? Do you have any Doubting Thomas boardroom stories to share with your peers? Please scroll down and use the comment box to share a thought or two on this very important board development topic. We can all learn from each other.

Here’s to your health!

Questions every non-profit executive director should be asking

March 13, 2013 erik Fundraising

It has been an exhausting whirlwind of work the last few months. While I would never dare complain about work so as not to upset the consulting gods, I need to take a short break. So, this week I will re-run some of the most viewed DonorDreams blog posts on fundraising and leadership. I hope you enjoy today’s post on questions every non-profit CEO should be asking. Enjoy the flashback! ~Erik

Questions every non-profit executive director should be asking

Originally published on June 14, 2012

Tony Stoltzfus explains in his book “Coaching Questions: A Coach’s Guide to Powerful Asking Questions” that there are many reasons why asking questions is important. I highlighted the following three reasons:

Asking empowers
Asking develops leadership capacity
Asking creates authenticity

I believe the very first reason in this list explains why non-profit executive directors need to get better at asking questions of their board members. The following is what Tony says about “asking empowers”:

. . . roughly 80% of the time, I find that they already know what to do: they just don’t have the confidence to step out and do it. Self-confidence is a huge factor in change. When you ask for people’s opinions and take them seriously, you are sending a powerful message: “You have great ideas. I believe in you. You can do this.” Just asking can empower people to do things they couldn’t do on their own.

Sure, Tony is talking about executive coaching in that passage, but in some regards executive directors serve as a coach to the board of directors. At least sometimes . . . right? (Yes, that job involves a weird little dance and sometimes the board leads and other times the executive director leads. Sigh!)

I cannot tell you how many non-profit executive directors tell me that their board members are disengaged. While there can be many reasons for this phenomenon, one reason could be that the executive director is doing too much talking and not enough asking. Think about it for a moment.

When I decided to open The Healthy Non-Profit LLC last year, I saw a blog post from Seth Godin titled “Questions for a new entrepreneur“. After reading it, I posted it to the bulletin board in my office. I periodically go back and re-read it because the questions he suggests a new business owner ask are right on target. Here are a few of those questions that I think are applicable to non-profit executive directors:

Are you aware of your cash flow? What’s your zero point? What are you doing to ensure you get to keep swimming?
What’s your role?
Are you trying to build a team?
Why are you doing this at all?

Circling back around to the idea of engaging board members, here are a few questions I found in Tony Stoltzfus’ book “Coaching Questions: A Coach’s Guide to Powerful Asking Questions” that I believe non-profit executive directors should be asking of their board members in committee meetings and in the boardroom:

Where do you see this going?
How do you want things to turn out? What’s the best possible outcome?
What do you think this looks like from the other person’s point of view? (e.g. donor, client, staff, etc)
How do you feel about that?
What are the real issues here?
How should we make this decision?
What do you need to know to make a great decision?
What would a great decision look like?

I believe the following Ralph Waldo Emerson quotation can best summarize how important a good executive directors can be to their board of directors, especially if that executive director knows how to ask really powerful questions:

“Our chief want is someone who will inspire us to be what we know we could be.”

What questions do you hear being asked by executive directors? Are they powerful and engaging questions? Please use the comment box below to share a few examples.

Here’s to your health!