From Better Boards

What does your board know about fundraising?

What does your board know about fundraising? I wanted to share my podcast interview on boards and fundraising with Steven Halasnik of Nonprofit MBA.  https://tinyurl.com/ygmn72x6

What does your board know about fundraising? Start here:

  • First and foremost, the board needs to ensure that its nonprofit is making an important difference for its community, its constituents, or the planet. That is, the Board needs to ensure that the organization is worthy of donor support.
  • Next, it needs to ensure that the organization is trustworthy, that it stewards its resources well.
  • Then, board members need a deep emotional connection to the mission, to be able to be ambassadors and to sincerely thank donors for their support.
  • After that… it depends…

Is your nonprofit worthy and trustworthy?

Hooray! for reviving purpose-driven boards

Anne Wallestad, the CEO of BoardSource, has been rocking the nonprofit universe this month with the release of The Four Principles of Purpose-Driven Boards. I encourage you to read her March 10, 2021 article in Stanford Social Innovation Review.

What makes Anne’s article so noteworthy isn’t that her sentiment is new. But when BoardSource speaks, the nonprofit community listens. And, she said it so eloquently, especially for these times.

Here are the four principles of purpose-driven boards:

  1. Purpose before organization. A board’s first loyalty is to realize its purpose. Achieving that purpose may demand transcending the organization to achieve it.
  2. Respect for ecosystem. Boards need to understand the community in which they operate, the issues they serve and respect the other players in that system.
  3. Equity mindset. Boards need to ask recognize disparities and inequities in society and prioritize decisions to advance  equity.
  4. Authorized voice and power. In our system of corporate governance, boards represent the community they serve and act in its best interests. This requires both listening and embedding lived experience into the board itself, as equal partners.

The purpose-driven board has a history at least three decades long and likely more.  

Once in favor in governance circles, now often dismissed, is the PolicyGovernance(R) framework of John and Miriam Carver. At the heart of this framework is a focus first and foremost on delivering the Ends, or community impact.

In his 1990 book Boards That Make A Difference, Carver says:

The only justifiable reason for organizational existence is the production of worthwhile results.”

“The … impact on the world … should be chief interest, even obsession, of the governing board.”

Or simply stated: “What good? For whom? At what cost?” 

In Carver’s world, it is board work to be the link with the “moral ownership.” To ask, for whom or what exactly are we the trustee?

Back in 1986, Kenneth Dayton, then CEO Of Dayton Hudson Corp., spoke to Independent Sector,  a speech that was groundbreaking for its time. The speech was published as a monograph the next year. I would have loved to be there. I keep that monograph close and wrote about it in my article Governance is Governance.

In it, Dayton says about boards: “As representatives of the public, [board of director’s] be the primary force pressing the institution to the realization of its opportunities for service and the fulfillment of its obligations to all its constituencies.”

And in BoardSource’s own 2005 monograph, The Source, Twelve Principles of Governance that Power Exceptional Boards, Principle #2 is being Mission Driven.

So why have our boards drifted so far away from purpose?

Here’s my hypothesis.

In my own book on board governance, I write that as organizations move farther and farther away from their founding, they tend to drift away from the passion of purpose that created them.

As organizations grow, everything becomes more complicated. Finances are always pressing matters for boards, as are staff. And policy. And buildings. Before they know it, the gap between the board’s immediate focus and fulfilling the mission is a chasm.

Then, trying to improve their governance, those boards are hit with the shoulds and how-tos of being a board. Those trainings tend to be consumed with instruction about financial oversight, CEO-Board relations, term limits, or so-called fundraising obligations (you know I have a lot to say about that!).

But when was the last board training you attended all about how the board can focus on achieving its nonprofit purpose?  One of the hardest exercises I undertake with board as part of strategic planning is creating a logic model. The hard part: courageously articulating what is the impact the organization is trying to achieve.

What I truly appreciate about Anne’s recent article is that it acknowledges what the governance research and a few of we practitioners have been preaching: that there is not only one way to be a board “For all these reasons, a board can be redesigned in any number of ways, provided it has the collective will to do so. This is both the beauty and the challenge of a board structure…”

So let’s take a collective board breath. Let’s deeply inhale this the focus on purpose-driven boards. For every board member, let’s promise to put purpose above all else.

Our society depends on it.

Is it time to step off the board?

Monday was a sad day for me. It was time to step off the board of Blackstone Academy Charter School.

Flowers and gift basket

Leaving did generate great departing presents!

Have I mentioned already how much I LOVE LOVE LOVE this school? I’d be surprised if I haven’t because I usually find a way to promote Blackstone regardless of the situation I’m in. If you asked me ten years ago if I’d ever find myself singing the praises of a public charter school, I’d likely say no. But after I worked with this school on a fundraising consulting project, I offered my volunteer services. That turned out to be board service, because that’s what I’m good at.

That was nine years ago. For the last three years (with a little extra due to COVID), I’ve also served as board chair.

The mission of Blackstone is “to build a strong community of learners and leaders.” Blackstone wants students to emerge from school with a strong sense of themselves as lifelong learners and a responsibility and investment in the wider world.  Read more

Do your board leaders have too much responsibility?

In the P.C. (pre-Covid) year of 2018,  a team* of consultants, members of  the Alliance for Nonprofit Management  Governance Community of Practice set out to learn more about the formal leaders of nonprofit boards. We assigned the phrase board leaders to refer to officers and committee chairs.

three bowls with signs from the fairy tale Goldilocks

This Photo by Unknown Author is licensed under CC BY-NC-ND

Who responded?

Through the magic of survey monkey and a process called snowball sampling, we heard from 398 leaders of boards of local, regional and national organizations. They came from 35 US states and about two dozen from across Canada.

Of these respondents:

  • 216 chairs were board chairs, 36 of whom were co-chairs.
  • 78 were vice chairs and 31 described themselves as chair-elects.
  • 69 were board secretaries (also known as a clerk in some states)
  • 35 were treasurers.
  • 51% indicated they held positions as committee chairs, some of which overlapped with their officer positions.

How hard is it to recruit board leaders?

While we asked many questions, I wanted to zero in on what we heard about job size.

This might sound very familiar: 75% of the leaders answering the survey said that it was at least somewhat challenging to recruit the formal leaders of their boards with 28% Read more

Making working boards work

It takes a lot of people-power to accomplish the work of our nonprofits. Staff, volunteers, and, for the tiniest of organizations, their “working boards.”

You’ve probably heard that expression. I hear it frequently: “we’re a working board.”

Guess what? All boards have work.

In virtually all of our charitable nonprofits, our board members are likely to wear two hats:

  1. the hat covering their fiduciary and governing responsibilities.
  2. the hat covering their volunteer, or staff-like tasks.

What is the work of the board?

Governing responsibilities are about setting direction and overseeing the well-being of the organization and its mission. These can’t be delegated away.  For example,

  • approving the big vision
  • ensuring guiding strategy
  • setting and monitoring the policies that guide organizational work
  • defining the values everyone lives by
  • defining the metrics that measure success
  • asking the critical questions about impact, community changes, what’s coming down the pike
  • making tough decisions about priorities and resource allocations
  • organizing the board, from creating the standard of board excellence to determining the processes that bring people on board, train them, set meeting and decision standards and more.
  • Choosing and providing feedback to the CEO or leadership staff team, acting as their strategic partner and letting go of them when they are no longer serving the organization’s needs
  • overseeing required public reporting and accountability.

What are some staff or staff-like tasks? These are the things that if your organization had the money, you would likely pay a professional person to do. Tasks like:

  • raising revenues and caring for donors
  • running all aspects of events
  • caring for facilities
  • running programs
  • keeping the books, paying the bills
  • marketing, communications and promotion
  • media relations
  • managing the staff
  • recruiting volunteers

So what do people mean when they say they have a working board?

Organizations say they have a working board when they have no or few staff and board members are usually the folks filling most of the staff functions. Or they may have staff but the board keeps some particular function for itself.

Board meetings get all muddled up by combining the work of governing and the work of managing (or staff work).

Staff work also gets neglected or done ineptly when no one person (or team) is in charge but everyone — the board — is in charge.

Here are a few suggestions to enable better work from your working boards.

These are some suggestions to get you started.

1.Divide up your board meetings. Be clear about what items on the agenda are governing work and what items on the agenda are really a staff meeting. You might even want to set them up as two meetings. One that’s the board following all of its bylaws procedures. When that adjourns, then open the staff meeting. You might not even need all the board members present for that if there is no work that involved them.

2. Be clearer than ever as to the goals that have to be accomplished, who is responsible for accomplishing them, and what authority the board has delegated to those people. This can save countless hours  having the full board arguing over the cost of an event ticket or venue.

3. Recruit volunteers for staff work beyond the board. I say this often, most volunteers would rather not be on the board.  I happen to find the work of governing very fulfilling. But those folks who like running a community meal site, or teaching a workshop, or working with their hands don’t often want to be on the board.

4. Recruit board members as managers of critical functions in the organization. Give them something they are accountable to the board for achieving. That might be raising the budget dollars, ensuring a years worth of membership programs are carried out, or serving as stewardship manager for your properties. They don’t do this alone.. they can recruit volunteers to be on their committees. But every board member should have a job and outcome that he or she is responsible for achieving.

What else have you found to work well in your working boards? Love to hear from you.

Our new study: COVID’s impact on boards

Wondering about COVID’s impact on nonprofit boards? Then take a look at our new report, How COVID affected nonprofit board practices.  It is based on a survey of 119 nonprofit board and staff leaders at dozens of organizations in Connecticut, Rhode Island and Massachusetts.

We collaborated with our colleague Mike Burns at BWB Solutions to survey each of our clients and followers on how nonprofit boards have responded to disruptions cause by COVID since the shut down in March.

Changes in meeting format

The most striking COVID impact on board practices reported was the rapid transition to online meetings. Board meetings via video conferencing were rare before COVID, but are nearly universal now. About a fifth of respondents expect to continue all virtual meetings after COVID restrictions end. Up to half expect to use some hybrid of video conferencing and in-person meetings in the future.

Changes in practice

While the majority reported little or no change in the board’s overall effectiveness, a sizeable minority said that board work had improved since the onset of the crisis. A number of respondents reported that their boards had put fundraising and planning projects on hold during the shutdown.

Future expectations

We thought we would see some panic about COVID’s impact on boards and the nonprofits they serve. While almost equal numbers reported the likelihood of reducing or expanding programs or operations, board members tended slightly more to reductions while CEOs leaned slightly toward expansion. Very few expected to go out of business or merge with another nonprofit.

Recommendations

Mike Burns of BWB Solutions co-authored the report with Gayle L. Gifford and Jon Howard of Cause & Effect, Inc. We recommend that boards and executives reflect on what they can learn and adapt from changes in board practice since COVIC. We further call on boards to challenge all core assumptions to better prepare for future disruption.

Download the full report as a PDF here.

Please take our board coronavirus survey.

Smiling faces on video conference

This Photo by Unknown Author is licensed under CC BY-SA-NC

How is your board doing? And other boards in New England. Would you like to know? Then please take this board coronavirus survey. Click here for survey.

Board service is challenging in the best of times – and these are not the best of times.

Cause & Effect Inc. and BWB Solutions have partnered to survey non-profit board leaders and chief executives in New England. With your response, we can better understand and record how the pandemic has affected the process and practices of your board. By sharing your insights and experiences, we’ll all do better in the challenging times ahead.

Read more

Before the scandal – 5 questions for your board

Taking a good look at someone else’s unfortunate sign of man diggingsituation before a scandal happens could head off a problem for your organization tomorrow.

Asking tough questions today can save deep trouble down the road.

Our local news has brought us more nonprofit scandals in the last few months – financial mismanagement, executive directors run
amok, programs ruined.

If this has happened in your area, consider this is an important learning moment for your board of directors. At your next board meeting, schedule some time to talk about the scandal and how vulnerable your organization might be to a situation like this.

Here are five questions to get your discussion started.

  1. What temptations led to this situation?
  2. Could this happen in our organization? How?
  3. What would our board have done in this situation?
  4. How can we prevent this from ever occurring here?
  5. How can we support and enable courageous questioning by our board members?

If you take our advice, we’d love to know how this conversation went for your board.

What other questions would you add to our list? Drop us an email.

For more on this topic, read

Employee theft – it can happen to you.

WHERE WAS THE BOARD? Too often, complicit

 

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.

**********************************************************************

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