The Butterfly Effect

Five elements of thinking strategically

1. Intent focused
2. A systems perspective
3. Thinking in Time
4. Intelligent Opportunism
5. Hypothesis-driven

These are the five elements that make up strategic thinking as described by Dr. Jeanne M. Liedtka, a faculty member at the University of Virginia’s Darden Graduate School of Business and former chief learning officer at United Technologies Corporation.

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Employee theft – it can happen to you.

Oh no! We've been robbed!

The July 2019 news brought another case of employee theft. The Executive Director, Controller and a business partner of the Boston Center for Adult Education have been charged with stealing $1.7 million over the last seven years. Time to share this advice. once again.

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April 2014

Another news release about significant employee theft at a nonprofit rolled across my desk. A quick internet search on embezzlement at nonprofits turned up a myriad of cases. Time to talk to an expert in the field.

So I turned to Michael Santocki, Esq, First Vice President at Alliant Insurance Services (formerly  Crystal & Company) a “ leading strategic risk and insurance advisor.”

An attorney by trade, Michael has been in the insurance business for 20 years. We had a long discussion about many aspects of risk management at nonprofits, specifically in the area of employee theft.

GG: What can you tell me about employee theft at nonprofits?

MS: Employee theft is one of the most common areas of risk for nonprofits. Unfortunately, nonprofits don’t always have the level of controls that many private companies have.

According to a 2014 report by the Association of Certified Fraud Examiners*, Nonprofits across the US lose approximately 5% of annual revenues to fraud.

GG: Could you tell me some of the ways this happens.

MS: Unfortunately, there are lots of ways this can happen.  Bookkeepers often create dummy invoices, ghost vendors or kickback schemes.

Take kickback schemes. In this case, an employee at the nonprofit works out a deal with the vendor. Let’s say the employee orders supplies, say 100 of some item. The vendor only ships 80 of that item and then kickbacks part of its profit to the employee on the 20 items that were not shipped. While the amount might be small, this type of theft adds up over time if it’s never caught.

Other types of employee theft are very innovative. For example, the office is being renovated so the employee slips in their own bills for renovation supplies for their own property.  An employee can prepare dummy invoices, where the check is written to themselves and then fudged later. This happened at Roman Catholic Diocese in NYC where a long-time, trusted employee in the accounting department, who was obsessed with purchasing expensive Madame Alexander dolls, was arrested in 2012 for embezzling more than $1 million over seven years.

GG: So what can an organization do to protect itself?

M.S. While criminal background checks are important, unfortunately, about 87%* of fraudsters have never been charged with a prior offense and that holds for both for profit and nonprofit organizations.

Nonprofit organizations need to be vigilant and take preventative measures to minimize the risk of theft or catch it early.

It is pretty hard to spot an executive director engaged in this type of activity. Never let one person be in charge of everything.

For example, make sure that you segregate duties for the folks paying bills and those handling money, have surprise audits, make sure that you have counter signatures on checks, and conduct fraud training for your employees.

Often the way many organizations catch the thief is to make the employee take vacation and then someone takes look at their work.

Know your employees. Keep an eye out when something seems out of line… be astute about suspected changes. Have a confidential hotline for employees to report suspicious activity within your organization.

GG: What if a theft happens anyway?

M.S. The good news is that an organization can transfer the risk by buying an insurance policy. For example, a crime insurance policy covers theft such as forgeries, alteration, counterfeit, burglary or robbery. Most mid-sized nonprofits could generally buy a policy for around $5000 for comprehensive coverage. A tiny organization could buy one for a few hundred dollars.

GG: Thank you Michael for opening my eyes to this uncomfortable world of employee theft. But both boards and executive directors need to be aware that not only can this happen, that it does with some regularity, even in our nonprofit sector. Be prepared.

*2014  Association of Certified Fraud Examiners: http://www.acfe.com/rttn/docs/2014-report-to-nations.pdf

 

Donor moment of insight: annual report lists

I am ever so thankful for a donor moment of insight.

When I’m working with a client on a strategic planning project, with their board and staff we routinely interview a selected group of stakeholders. They might be colleagues, political or government leaders, relevant businesses, funders, donors, volunteers … anyone with special insight. And it’s super great when two or more of those categories overlap.

A few days after a recent interview, I received a follow up email from a community leader-donor. They remembered something else they wanted me to share.

The donor had received the latest annual report. Like most of these reports, it included a list of donors. In this list, the organization had made a special effort to note donors who had given continuously.

Unfortunately, what was recognition for some was a rebuke for another. My donor felt hurt by not being included in this list. You see, this donor had been a donor for many long years. But, due to a few years of tight finances, there was a gap in their giving.

They were no less loyal. They started giving again when their finances improved. But that didn’t seem to matter. And now they were reconsidering future giving.

I completely sympathized. I feel this way whenever my college sends out its annual report with the same listing. Though I’ve been giving for many many years, I’ve missed a few now and then. Once I gave two gifts in the same fiscal year which knocked me out of the continuous recognition.

Think! What are you trying to accomplish with that public list of donors?

In this case, the intent was to reward some donors and inspire others to similar continuity. But it unexpectedly caused hurt feelings on the part of another long time donor.

Penelope Burk documents a number of concerns learned from donor research in her book Donor-Centered Fundraising. One that stands out are listings by gift range. A small donor might be making a huge stretch to give what they do. Yet they will never seem as valuable as those big donors for whom the gift that got them top recognition might be a drop in the bucket.

As the folks who care most about our donors, we’ll do better if we set aside convention and think of more creative ways to recognize and acknowledge our donors. The Audubon Society of Rhode Island’s complimentary membership is a good illustration of the return when you put donor needs first.

So, using that donor moment of insight shared above, here’s a simple solution:

 “Donor Since….”

 

Let’s talk about moral capital and recruiting your board

Just as I was getting ready to write this post about the need for more moral capital on your board, the higher education scandal broke in the US. Thirty-eight people taken into custody as of noon on March 12th in this bribery scheme.

It turns out that very wealthy folks from business and the media bribed administrators, coaches, test proctors and others to grease their kids into elite private colleges and universities. I guess their large direct donations weren’t enough?

Shamefully, this was done through Key Worldwide Foundation (KWF), a 501c3 public charity led by William “Rick” Singer who is pleading guilty to the charges against him.

According to its 2016 Form 990, KWF has just three directors: Singer as President and CEO, a Secretary, one other person. (The treasurer is not a director.) And, not only were the donors to KWF offering bribes for college placements, they were likely getting tax deductions for making those bribes through the nonprofit.

You need a philanthropic or moral compass in your organization — and most assuredly within the board. All your well-crafted bylaws, job descriptions, and list of expectations with references to ethics, the rule of law and conflict of interest won’t make up for directors or staff who lack a moral guiding light to do what is right.

People as capital

Talking about people as capital seems to be contrary to discussing your moral guiding light.

But I’ve previously pitched Professor Elizabeth Castillo and her typology of capitals. Using her list, you can begin valuing people beyond their own financial capital when you consider what you need in the way of the human capital you recruit to your board. This moves you beyond just recruiting directors who are wealthy donors and connectors to other money. It lets you value other assets that strengthen the board – e.g. intellectual, social, political, and cultural capital. And yes, moral capital.

And I don’t mean someone who can thread their way through the needle of what might or might not be ethical or legal. I want voices that are steadfast in defense of doing things the right way, with justice in their hearts, courageous enough to call out when something is bad, smells bad or just doesn’t feel right.

Unless our sector stands strong for honesty, truth and transparency, we risk the public’s trust — which has been on a downward slide for many years.

How much moral capital sits on your board?

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WHERE WAS THE BOARD? Too often, complicit…

A case study of collaboration, network weaving, social capital and the power of a partnership culture

A new look at recruiting your board

Organize your thoughts with Mind Mapping

When I’m trying to get my head around the complexity of an issue, I’ll often use the graphic note taking technique known as Mind Mapping.

I first learned about mind mapping in graduate school when I was introduced to this technique credited to Tony Buzan.  One of my fellow graduate students took all of his class notes this way. Jack carried a large pad and many colored pencils to class with him. I was intrigued.

The big idea behind mind mapping is that it aligns with the way our brain works, making it easier to scan and memorize a lot of data. It is also a great way to organize thoughts that you can then see at a glance.

The technique is relatively simple. Key concepts radiate out from a central topic.

I drew the map you see here when I was starting strategic planning with a tourism council. By creating the map, I was able to capture my understanding of the tourism ecosystem or tourism landscape and check that out with my client. I developed this map for a particular geographic region. Your tourism map might look slightly different depending on where you live. With the map as a guide, I was able to help my team evolve a list of key informants for community interviews and to help drive data collection.

Mind maps use this radiating approach, with color and lines showing connections. If I had more artistic talent, I might put images into my map to make them even more memorable.

You can find software to create mind maps for yourself and to share with your colleagues. I use those now and then. But sometimes, just getting out the pens and colored markers are quite enough to organize my thoughts.

Mind mapping calls to me in part because it reminds me of the sentence diagramming I was taught to do in junior high school. (I admit it. I was such a geek).

Do you use mind mapping? For what purposes? Do you have software you’d recommend?

I’d love to hear from you.

The value of good process

When I’m working with boards of directors, one of the most requested changes is to help them set up a good process for recruiting new directors.

Process may be one of the most undervalued resources your organization possesses. Would you value good process more if you knew that it was truly a resource – or form of capital — available to strengthen your organization?

I may have spoken to you about my mad love affair with the work of Professor Elizabeth Castillo from Arizona State University. Professor Castillo is on a mission to have organizations begin to value all their forms of capital, not just the financial ones. And I’m one of her apostles.

We recently collaborated on a workshop for the Alliance for Nonprofit Management called Capacity building as capital building. The workshop introduced this idea of multiple forms of capital to consultants, and funders and researchers.

On the exhaustive list of 20 types of capital available to organizations that she has assembled, you’ll find this one: process.

What is capital and why is it valuable to your organization?

So what is capital and why are there so many different forms of it. One definition of capital is “any enduring asset capable of producing additional assets.” If you have money in the bank, you grow interest. Capital can accumulate.

Capital can also morph from one form to another. When you take that money in the bank and buy a building or van with it, you’ve converted it from financial capital to physical capital. Read more

A new look at recruiting your board

Are you struggling with recruiting your board of directors?  Take a look at the newest addition to our Toolbox: Recruiting your board of directors.

First, what do you want of your board members?

  1. First and foremost, to be great governors (I hope that is first). When you consider the right composition of your board to exercise its role in governance, you’ll need a mix of members demonstrating attributes such as strategists, systems thinkers, nonprofit, issue and community knowledge, diverse worldviews, wise stewards, moral and ethical folks, collegial, disciplined, and courageous, among others.
  2. Second, we have come to expect that our board members should be leadership volunteers.  As volunteers who help the organization move forward staff functions as appropriately called upon, look to recruit to the board individuals who will use their skills and connections in service to particular functions of the organization, such as government relations, or fund development, or expertise in marketing, communications or evaluation. The need for these volunteer skills is highly dependent on the number and types of professional staff in your organization and your business model.

Consider your board members as vital components of the human capital your nonprofit needs to function

So, in developing a great board, you need to consider what you have set forth in your strategic plan and what it will take to get from here to there. What is the ideal profile of the board to achieve your desired future?

Second, where can you find these folks?

I’ve written before about the benefits of keeping a running list of board members. IMHO you can’t have too many candidates to choose from. To get there, look everywhere. Start with your donors and volunteers. Consider asking for help. Read the newspaper and local (or national) magazines or other sources to find the folks that suit your profile. Leave no stone un-turned.

Share your best recruitment stories with all of us. We’d love to hear from you.

Is strategic planning dead?

Photo by Jonathan Howard.

It seems that every time we start a planning process, someone on the board or staff sends a link to an article that declares that strategic planning is dead. Too archaic. Not fast past enough. Too long a planning horizon.

Well, saying strategic planning is dead sure makes a great headline.

But, no, strategic planning is not dead.  Though we have seen plans we’d like to kill.

Can you be the master of your fate without strategy? 

Yes, your organization needs to be flexible, adaptive and responsive to changes in your environment. But that’s not an excuse for never planning.

Too many plans are heavy on the operational details, really more of a business plan that prioritize tactics for strategy.

Here are a five posts to guide your way to producing plans that matter.

1. Strategic planning is all about your thinking

Seeking out data, talking to others, grappling with questions, pursuing answers, creating frameworks, crunching numbers — that is the strategic planning. The written report is just the codification. Here are a few questions to spark your thinking.

2. Clarify your logic model

We are logic model fanatics. Well, kind of. We love them because they put down on paper all of the assumptions your organization is making about how your will create the change you want to see in the world. Surprise! You weren’t all in alignment. Now you can be.

3. Stress test your plan

We are always grateful when board members push hard on plans. What if we stress test a recent decision against the plan framework? he asked. Here’s how that worked.

4. Speaking of board members, when should they be involved?

Beginning, middle, end? All along the way? Really, there is no one right answer. Here are some ideas to help you assess what is right for you.

5. Five must haves for your strategic planning to produce action

Finally, bringing your plan to life requires more than just good thinking. Here’s what else you’ll need.

Wake up that sleepy board

Has boring put your board to sleep? Is it the arcane machinery of Roberts Rules? Pointless reports? Endless discussions? Trivial debates?

 

Dull can be dangerous when it com
es to boards.  Listless boards may be asleep at the switch when a resignation or crisis calls on them to step up and actively direct the organization. Members may snooze through information that ought to set off alarm bells.

Here are five tools you can use to help transform sleepy board meetings from ennui to engagement.

  • Move that table out of the room. Suddenly, you’re sitting in a circle with no head of the table to establish hierarchy and nothing to hide behind. If you can’t move the table, move the board members.
  • Serve food. Sharing a meal creates human connections, starts conversations and sets the mood for a great meeting.
  • Break into small groups. Especially on larger boards, many participants never say a word. You might be missing a brilliant insight.  Small group discussion helps advance board thinking as members help each other refine and develop good ideas.
  • Take notes on flip charts. Recording key points where members can see them as the meeting moves along assures board members they’ve been heard. Flip chart notes provide structure and a sense of progress through the agenda.
  • Move people around. Too many board members never get to know their board colleagues. Move table tents at each meeting. A new perspective on the meeting space may also open the door to a fresh look at the board’s business.
    You can find more great meeting techniques in our Board Toolbox. 
Or call Cause & Effect for expert design of your breakthrough board meetings. (401) 331-2272

 

Watch your board meeting seating arrangements

What are your seating arrangements? Have you thought about how far apart  your board members sit at a meeting?

I was interviewing a pretty amazing board chair on a project recently. She was telling me how much more engaged the current board was and how much they were feeling like a team.

Then she added this:

“I think some of that is because our board members are sitting around one relatively small table, unlike other boards where the table is in one giant U and people are far apart from one another. It’s harder to be separate from the rest of the group when you sit close together.”

Whack on the side of the head! I had to stop and write it down. Distance in the board room does not necessarily make the heart grow fonder!

Take note of how far apart your team is.

You’ve experienced this, I’m sure. Multiple tables are configured into a big U or rectangle, but there is great distance between the tables. While board members may be able to see each other, they are physically very far away from one another. It’s often easy to hide when you are far apart.

Of course, there are many considerations in table seating and you’ll find a lot of research on this subject. Here is some anecdotal information I’ve experienced over the years:

  • When the meeting facilitator sits at the “head of the table,” it increases their perceived authority. So if you see yourself as a collaborative leader, take a seat in the middle.
  • Folks like to sit where they sat before. So use table tents and move seating around from meeting to meeting. It encourages board members to get to know folks they don’t know as well.
  • Get everyone up to the table. It’s easy to hide in the back row and it signals distance from the rest of the group. If the table isn’t big enough, find a new space to meet. (Or maybe your board has gotten way too big).

Maybe King Arthur had the solution.. a round table.