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Category: Board Governance

What Nonprofit Boards Need to Do to Protect the Public Interest

Mature businesswoman leading team meeting in conference room

The people who serve on a nonprofit’s board of directors are legally responsible for its performance. Despite their importance, board members are rarely in the news. When they do make headlines, they may have messed up.

Perhaps the most spectacular example is what happened to Donald Trump’s now-defunct charity. While he was a sitting president, Trump was forced to dissolve his foundation and pay $2 million to other causes after New York state authorities found that the Trump Foundation had violated numerous state and federal laws.

Among other lapses, his foundation inappropriately coordinated with his political campaign and engaged in self-dealing – using charitable money for his own personal benefit. In addition, state authorities determined that the foundation’s board members had failed to fulfill their duties.

In fact, that board allegedly hadn’t even held a meeting for two decades.

Fortunately, such cases are rare. But as a nonprofit management professor, I find that extreme tales of board failure can help illustrate what boards are actually supposed to do and why it’s so important to get it right. Public trust in charities is at stake.

Doing More Than the Minimum

 

To perform their jobs at a minimal level, boards of directors have to meet legal requirements, such as convening at least once a year and supervising an organization’s top leader.

But board members must do more than that if they are to meet the expectations of the donors, volunteers, staff, and other stakeholders of the nonprofit they oversee. Let’s call these the “necessary” versus the “legal” obligations. While nonprofits’ tax-exempt status requires them to show the public they perform some community benefit, stakeholders who are supporting the organization may demand more.

Fortunately, board members can turn to organizations like the Council of Nonprofits and other sources trusted by expertsfor excellent guidance. Let’s take these expectations one by one.

The Basics

 

Most states require nonprofit boards to include at least one to three people. Experts believe that groups make better decisions than individual people.

So donors are wise to insist that any charity they fund have more board members than the minimum for better oversight. Larger boards — but not too large — perform better. Most have somewhere between eight and 14 members; newer organizations may have fewer.

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Nonprofit boards that do more than the law requires are more likely to succeed.

There are an estimated 1.5 million registered nonprofits in the United States., with staffs that may range from a single unpaid founder to thousands of employees. These groups carry out a dizzying array of missions, ranging from community health care to boosting support for national parks.

Because of that diversity, experts will never agree on a single job description for nonprofit board members. Nor would they agree on a single recipe for who should sit on a board, although experts think nonprofits should pay more attention to diversity and representation.

Nonprofit boards typically recruit people who can represent the people served and who bring a range of skills and expertise in such areas as finance, communications, and management, along with a connection to the organization’s mission. Most nonprofits also expect board members to make a meaningful financial contribution to the organization themselves.

Although it’s legal for nonprofits to pay board members, most are volunteers.

Care, Duty, and Obedience

 

Legal expectations of boards come from both the states and the federal government. For the most part, a board’s legal responsibilities fall into three categories: a duty of care, a duty of loyalty, and a duty of obedience.

Care means board members must meet regularly enough and provide enough oversight to ensure a nonprofit’s staff, budget, and other resources are furthering the mission rather than squandering its funds or diverting them to personal expenditures.

Loyalty means they must act in the organization’s best interest, rather than their own, avoiding conflicts of interest.

Obedience has to do with ensuring that the group follows all applicable laws and regulations while acting in accordance with its own policies and mission.

Those three obligations add up to what’s known as a board’s fiduciary duties.

These duties encompass most of what boards do: approve budgets and expenditures; ensure that audits are conducted; hire the nonprofit’s chief executive and set that person’s compensation; and ensure that required public reporting happens, such as submitting a 990 informational return to the Internal Revenue Service every year.

Nonprofit board members have many legal obligations.

Nobody’s Business

 

Unlike in the case of businesses, nobody owns a nonprofit.

Instead, nonprofits essentially belong to themselves. Since they are mostly tax-exempt, they operate under the distant supervision of public officials such as a state’s attorney general. The board acts as agent of the state to ensure the public trust is not broken.

That’s why board members are often called “trustees.”

And on the rare occasions when that trust is broken, state officials will exercise their authority to step in, as they did with the Trump Foundation.

States set minimal standards for what boards need to do. Often, minimal compliance with those regulations does not suffice for an organization to thrive. For example, most states require boards to meet at least once every year.

Yet most boards meet five to eight times per year, since nonprofit experts agree that multiple meetings are needed to keep board members sufficiently informed and engaged. Additionally, regulators don’t require a conflict-of-interest policy, but stakeholders would be wise to do so.

Board Cultures

 

A board’s structure — how big it is and how often it meets — is fairly easy to observe and measure. But what matters more is how the board behaves. How boards do their work is at least as important as what they do.

I’ve identified three kinds of cultures that help a board stay focused on what matters: a culture of learning, a culture of assessment, and a strategic culture.

First, boards have to be willing to learn how to govern well, such as through training themselves. One common practice is an orientation for new members.

Members also need to assess not only the organization’s financial health but the health of the board itself. Although a board self-assessment is a recommended practice, since it ensures board members understand their job, it is practiced by only four out of 10 nonprofits.

Finally, boards need to devote sufficient time to planning for the nonprofit’s future. Strategic boards that do this may in turn support organizations that are more resilient — such as those that can withstand crises like the Covid-19 pandemic.

As for who can serve on a board, the honest answer is that just about any adult can. I would encourage anyone who is passionate and knowledgeable about a cause to look for leadership opportunities on a nonprofit board. If you have children enrolled at a school, how about becoming a member of its PTA board? If you enjoy shopping for fresh produce, perhaps you can join a board that manages your local farmers market.

Just be ready for the legal responsibility of being a trustee.

Editor’s note: This article is part of a partnership the Chronicle has forged with the Conversation and the Associated Press to expand coverage of philanthropy and nonprofits. The three organizations receive support for this work from the Lilly Endowment. This article is republished from the Conversation under a Creative Commons license.

7 Ideas for Pushing Your Board Forward in DEI and Belonging

by Allison Howe | 9.19.22 | Blue Avacado

 

Article In Brief:

  • The Problem: While nonprofits say they support improving diversity, equity, inclusion, and belonging (DEIB) actually doing it requires getting the board to buy-in to the need for culture change.
  • Why it Happens: There are many reasons DEIB efforts fail including not being a part of the strategic plan, lack of board champions, and lack of budget.
  • The Solution: It starts with measuring outcomes and holding the executive director and board accountable.

Propelled in large part by Black Lives Matter and George Floyd’s murder, the current social justice movement sweeping across the United States is showing up in every industry.

In the nonprofit world, donors, clients, and other partners are pushing organizations to demonstrate how they are honestly assessing and acting to improve diversity, equity, inclusion, and belonging (DEIB) efforts.

Undoubtedly, there will be organizations more focused on saying they care about the issue for the sake of appearances (and funding) rather than on doing the work involved in making significant and lasting change. Fortunately though, there are nonprofits working diligently to figure out how best to fully incorporate the values of DEIB into their mission, their culture, and their programming.

Let’s assume that your board has bought into the need for seeking change in DEIB culture. Now what? Here are seven ideas to consider as you continue to push forward this important work:

1. Include DEIB as an integral part of the strategic plan. Hold the board and ED accountable for executing.

It is always best practice to actively use your strategic plan as a guide to monitor that you are meeting your goals. And, of course, this active strategic plan must include DEIB.

Start your strategic plan with smaller, achievable goals so that you can accomplish them and build the foundation for success. Have methods of measurement in place so that you can identify successes. For example, as a training organization, our initial goal was to ensure that at least 25{d5efb31ba2a0192c04238dcf64650ea21d0ec6f459ad324325f3824298717899} of our speakers were BIPOC (Black, Indigenous, and People of Color). You can use similar metrics to analyze your workforce, consultants, and vendors. Review progress at board meetings and adjust as needed with new information.

It is important to note that you will not always see immediate impact. Engaging in DEIB work is a long haul, often taking many years to begin to see results.

2. Identify board champions of DEIB. Give them space and resources to drive change.

Chances are you already know who these people are, but they might include the ED and various board members, especially the board chair. These champions have probably read all the books and attended all the seminars about DEIB.

Seek out their opinions and ask them where they think the organization can make changes. Include their perspectives and ideas in every decision, including incorporating them into the strategic plan. Again, hopefully your board chair would be a champion or, at the very least, be supportive of these efforts.

Sometimes the first impulse of people in power is to delegate DEIB decisions to BIPOC leaders with the thought that these leaders will know what needs to be fixed and how to fix it in the DEIB space. However, it is essential that the people in power — often white, with economic advantages and influence — take on the responsibilities (and the risks) of working against racial bias and blind spots within the organization.

3. Make sure DEIB stays on the agenda and in the budget.

With continuous competing priorities, only so many items can be addressed. Too often a nonprofit’s time and efforts are focused on putting out fires. The board chair, as driver of the board agenda, needs to be sure that DEIB is not left behind and is responsible for making sure that DEIB stays on the agenda.

However, the chair should also be acting in concert with the ED. Together, they should ensure that the nonprofit’s leadership team includes budget lines that reflect DEIB areas, such as money dedicated to DEIB training and/or money that ensures salary equity. Ultimately, it is really up to the board chair and the ED to make sure that DEIB stays on the board’s agenda and is reflected in the budget.

Essentially, if you do not have resources put aside for an initiative along with a clear idea of whose responsibility the initiative is, it will not happen. Again, make sure that there is a line item for DEIB work, whatever that may look like. This line item might manifest in the hire of a DEIB consultant, the gathering of community feedback, the advertising for positions in new areas in an attempt to hire a more diverse workforce, and/or the commission of a compensation assessment.

4. Start small and build on successes.

Change is an iterative process. Start small and take the first step, whatever that is. The next step will build on that.

Maybe your first step as an organization is to diversify your volunteer base so that your volunteers are more representative of your community. To diversify your volunteer base, you might consider actively seeking out BIPOC volunteers at conferences and in networking spaces, talking about the initiatives you are building in order to get them interested in being involved.

As in so many things, the more people feel welcomed, the more likely they are to participate. As such, it is important to create a safe space for people of color where you demonstrate that you value their contributions, input, and opinions. Do not let your white colleagues hog the floor!

This iterative progress and focus will inevitably create new partnerships that will grow your nonprofit’s diversity efforts. As aforementioned, continue to share spaces for power and learning—the opinion of every person seated at the table should have the same weight.

5. Celebrate successes, no matter how small.

This work is hard and exhausting. We are working to overcome racist barriers and systems that were put into place hundreds of years ago. And this work is being done by individuals who often have to do difficult personal assessments. Just building trust with new partners can take a long time. It is easy to see all the areas that we need to improve.

Be sure to demonstrate success and share your successes for your own self-care. Similarly, people want to be a part of successful ventures, so share your successes to draw people in. If you show that you value DEIB and are committed to equity through your actions, others who care about DEIB will join you. Recognize successes at board meetings and — when appropriate — in newsletters and other community communications.

6. Bring in new board members who care about DEIB and some who have related expertise. Allow those who do not buy in to exit gracefully.

Let’s be honest. Not all board members care about DEIB. Some actually disagree that it is even an issue. Instead of investing time and resources into trying to change minds (a Herculean or impossible task), attract people who do care about this issue.

Talk about DEIB constantly at board meetings. This will show board members that DEIB is an important issue to the organization and encourage them to come forward with ideas of their own.

Alternately, you’ll also often find that those members who do not consider DEIB to be a vital issue will eventually leave of their own volition. As of yet, I’ve found continuously talking about DEIB to be one of the best ways to get people to self-select into (or out of) a board.

7. Be open to looking at yourself in the mirror.

As you are making your DEIB journey, you will absolutely see things about yourself and your organization that make you uncomfortable and ashamed. You may hear things that you do not want to hear. The trick is to be brave (not defensive) and to see through the discomfort in order to make your organization more effective and more equitable.

Viewing the World through DEIB Glasses

Ultimately, the way to be successful in making DEIB changes at your nonprofit is to look at every decision and opportunity through a DEIB lens. The organizations that are most successfully creating a DEIB culture are 100{d5efb31ba2a0192c04238dcf64650ea21d0ec6f459ad324325f3824298717899} committed to the work. As a result, we are already starting to see nonprofits building more equitable boards, updating human resources policies for equity, and evolving programs to be more reflective of DEIB, among many other actions. Continuing to focus on listening to the needs of the communities we serve and bringing diverse voices to the table will result in much more effective nonprofits.

 


About the Author

Photo of Allison HoweAllison Howe has served as Executive Director of NonProfitConnect since January 2019. During her tenure, she has worked closely with the board to significantly expand programs, including those focused on DEIB. She has worked to continue to establish NonProfitConnect as an expert resource in the community, utilizing her more than 20 years of experience in the nonprofit field.

An experienced leader in the nonprofit sector, Allison served on the board and then as Executive Director of the South Jersey chapter of the Alzheimer’s Association. As Vice President of Medical Administration for Planned Parenthood of Northern, Central and Southern New Jersey, Allison was responsible for many functions, including initiating research and telehealth services. Allison earned her master’s degrees in Business Administration and Health Services Administration at the University of Michigan and holds a Project Management Professional (PMP) certification.


Click here for link to original article.

Reframing Governance III

David O. Renz | 7.15.20

Click here for original article.

Editors note: This article from the summer 2020 edition of the Nonprofit Quarterly is the third iteration of “Reframing Governance,” which was first published in 2006 and substantively updated in 2012 and 2020 to adapt to new dynamics in a new world. Here, David Renz posits that while we have been obsessively focused on our organizational boards, much of the real consequential action is occurring elsewhere.


The article “Reframing Governance” was initially published in the Nonprofit Quarterly in 2006 to identify and discuss the implications of what I then perceived as a new form of nonprofit governance emerging in our communities—a form of governance that operated beyond the level of individual boards in individual nonprofit organizations and was reshaping many dimensions of nonprofit governance. I was intrigued with the growth of multiorganizational nonprofit initiatives emerging to address complex community issues and needs that outstripped the scale and significance of the usual forms of partnerships and collaborative initiatives, and, in particular, highlighted the emergence of a new level of governance integral to them. This phenomenon has continued to grow and elaborate exponentially as increasingly larger networks of public-serving organizations (nonprofit and governmental)—often labeled cross-sector collaborations1 or collective impact initiatives2—emerge to address in new and more powerful ways the most complex and wicked of our communities’ compelling needs and problems. Further, fueled by the rapid expansion of a myriad of increasingly sophisticated digital technologies and applications, these initiatives have become nearly ubiquitous across all continents. But what does that mean for today’s nonprofits and boards and governance?

The scale of these problems has outgrown the capacity of our existing freestanding organizations to respond—sometimes in terms of size, but especially, and more important, in terms of complexity and dynamism. Therefore, we’ve organized or developed our response at yet another level: the network. In the new mode, individuals and organizations are the units by which services are delivered, but such service delivery is designed, organized, resourced, coordinated, and accounted for (in other words, governed) by the overarching network of relationships (among organizational leaders) that crosses and links all participating organizations and entities. Sometimes formal and sometimes more ad hoc (as in social movements), similar dynamics have emerged in many parts of the nonprofit policy and advocacy domain, where different organizations’ actions are orchestrated by a coordinated governance process that operates largely beyond the scope of any particular board, even as it deploys lobbying resources from various individual organizations.

The New Nonprofit Governance Model

Governance is a function, and a board is a structure—and, as it turns out, a decreasingly central structure in the issue of new or alternative forms of governance.

Don’t get me wrong—boards are still important in organizational governance. But, for many key community problems and issues, they’re not always appropriate as the unit of focus. Governance processes—processes of decision making concerning action, based on and grounded in a shared sense of mission, vision, and purpose—include the functions of setting strategic direction and priorities; developing and allocating resources; adopting and applying rules of inter-unit engagement and relationships; and implementing an ongoing system of quality assurance that applies to all constituent organizations. In many key areas, these processes have moved above and beyond any individual nonprofit organization. If organizations do not work as an integral part of this larger whole, they don’t get to join or stay in the game.

Why don’t we see these developments, even when we’re looking directly at them? Because we’re still prisoners of the hierarchical, control-oriented paradigm of conventional organizing—we continue to look for a central leader, whether a person or a unit. But the new governance does not look like anything we expect (even though we talk about these issues quite often). Consider these changes:

  • No individual or entity is always in charge (though some certainly have more influence than others). In fact, allowing any one entity to regularly be in charge is often resisted.
  • The structure continually evolves and changes (though its general characteristics remain consistent).
  • We have been “trained” to focus our attention on boards rather than on governance.

Governance is not about organization; it’s an essential function in addressing a particular issue or need in our community.

For so long, individual organizations have been the default unit to address problems, and we assumed that it would always be this way. But now, more than ever, single organizations do not appropriately match the scale required for the most critical and substantive community issues and problems. It has become increasingly necessary to develop alliances and coalitions—extraorganizational entities—to address the multifaceted complexity of these critical needs and issues. And the most successful systems we’ve developed to govern these alliances reflect the same scale and complexity as the alliances themselves.

These systems of leadership embody the nature of social movements, with the fluidity and responsiveness that characterize the most effective of these movements. As anthropologist Luther Gerlach describes them, emerging systems of governance have the following characteristics:3

  • Segmentary: They comprise multiple groups and organizations, each of which is only one segment of the whole that works to address the issue at hand.
  • Polycentric: They have multiple centers of activity and influence to advance progress in addressing the cause of the whole, though each does its own work.
  • Networked: The multiple centers of activity are linked via a web of strategic relationships, and an important source of the organizational power of this web comes from the informal relationships that exist among those in leadership roles in the various centers of activity.
  • Integrated: These networks are connected by a core but evolving ideology that crosses organizational (and even sectoral) boundaries, as those who work to address the full range and complexity of an issue go wherever necessary to engage in their work.

In some cases, integration comes via those who hold a formal position in one organization (e.g., a staff position in a government agency), but who also serve in other organizations (e.g., a board member in a nonprofit agency or a leader in a relevant professional association). All these organizations play certain roles in addressing the particular issue or problem, and no single entity has the authority to direct these efforts (e.g., individuals working in AIDS prevention units or health agencies, but who are also active in advocacy organizations for HIV and AIDS prevention).

New Models of Authority and Accountability

In such networked settings, it has always been true that generative leadership and strategy are handled at the meta-organizational level; the individual organizations (or cells of operation) handle the frontline action or delivery of services (i.e., operations).

This structure is consistent with and fuels the accomplishment of an interorganizational entity’s mission, vision, long-term goals, and strategies (all of which are the domain of governance). For these domains of community action, it is no longer about the “networked organization”—it is about the “network as organization.”

These systems of organized (but not hierarchical) influence and engagement link multiple constituent entities to work on matters of overarching importance and concern. In this environment, the boards of individual organizations are guided by and often become accountable to the larger governance system. The frame of reference is larger than the constituent organization.

If you’re in one of these new systems of governance, your board has less strategic room to move. You’re dancing to the tune of a piper (or, more likely, multiple pipers) beyond your organization’s boundaries.

In other words, the governance of your work occurs largely beyond or outside your organization’s boundaries (and your organization does not really have the level of sovereignty formerly assumed).

Does this mean that boards of individual agencies are no longer relevant? No, not any more than any one program in a multiservice human-service agency is automatically irrelevant because it is part of the larger whole. The board is necessary, and, at its level, it offers critical value. But it’s not the only level of governance that exists—nor is it the overarching and highly autonomous entity that historically had the luxury of being in charge. It’s just not the only level anymore.

At their best, such governance systems demonstrate the ideal characteristics of an effective governance entity. They demonstrate resilience, responsiveness, fluidity, and an organic connectedness to the community and its changing needs. They exhibit processes of mutual influence and decision making that are more fluid but no less real than those in conventional hierarchical organizations.

So what has changed alongside this new governance?

Governance is most usefully understood from the perspective of the theory and research on interorganizational relations and, especially, the work to explain the dynamics of networks and organizations as integral but not autonomous units within networks.

What was once understood as boundary spanning has become boundary blurring. It’s increasingly hard to tell where one organization’s work ends and another’s begins, and the degree to which success can be measured is always referential to a larger whole.

Individual organizations are fundamental cells of activity and accomplishment, but their individual behavior and results are not adequate to explain what has been accomplished at the community-problem level. Fueling and enabling the emergence of this new governance is the growth in strategic alliances operating at various levels of loose or tight ties, of permanence and impermanence, and of intensity—and in the number of organizations whose capacity has evolved to engage in collaborative alliances, with the mutual investment and shared control of resources, and the sharing of risk.

All the above dynamics pose great challenges for accountability. Appropriate accountability must focus on the community level (not on an individual organization); accountability systems must include but cannot be limited to the constituent organizations and their internal management and decision-making structures.

New Challenges

This evolution in governance makes sense from an organizational theory perspective. It is a fundamental tenet of organizational theory that an effective organization’s design will align with and reflect the key characteristics of its operating environment. Thus, if an organization’s operating environment (including the problems it must address) is increasingly dynamic, fluid, and complex, the appropriate organizational response is a design that is dynamic, fluid, and complex.

These new levels of organizing (for which the “new governance” is emerging) have all the elements of an “organization,” but they can be confusing. Their elements just don’t look like our conventional organizational elements. Their operating imperative demands that they differ, so the successful model of organization and governance needs to be different as well.

This networked dynamic also reflects an increasingly democratic mode of organizing—at its best, it ties the action (whether provision of services or community mobilization) more closely than ever to the community to be served (and that community’s members will be actively engaged in the governance processes in play). Further, this dynamic does not pay as much attention to sector boundaries as it does to the capacity to do the work.

Thus, the organizations in the networks addressing complex community problems are likely to include individuals and ad hoc groups, governmental organizations, and even for-profit businesses, in addition to nonprofits. The mix of organizations depends on the assets they bring, where assets are defined by the nature of the problem and the needs to be addressed. One of the challenges of this emerging form of governance is that it moves the locus of control beyond any one organization. For better or worse, no single entity is in charge, and any agency that thinks it can call the shots will find its power over others muted.

Interestingly, this includes governmental entities that may still act like they are in charge. The fact that an agency has a legal or statutory mandate to address a problem does not give it any real control over the messy problems that these governance systems have emerged to address. No urban redevelopment agency, for example, has ever had the capacity to resolve its urban community’s problems without bringing other entities into the game, and, increasingly, other entities have demanded a substantive role in the decision-making process. Part of the power of this new governance is that it can better accommodate and engage this shared-power dynamic. Some individual organizations’ boards have begun to adopt this model. But these boards and organizations work at the network level, such as membership organizations comprising all the service providers in a particular domain of service (e.g., the coalition of all emergency service providers in a given metro region). These entities have been created to bridge and cross boundaries, and boards have the explicit charge of providing leadership across agency and sector boundaries to address specific community issues.

Most nonprofit boards don’t look like this because they have not seen the need. Further, most could not conceive of it—it seems too far out! But as a result of this new mode of governance, even individual agency boards now need to rethink how they should be designed and consider how they will do their work as a part of (rather than trying to actually be) the new governance design. Where might you find this new level of governance? When you look for it, using this new perspective, you’ll actually find it in operation in many domains of nonprofit work. In many metropolitan regions, for example, we find networks of organizations that have joined together to address the complex and dynamic challenges of community health—including, most recently, COVID-19.

They have their own boards, but they also have a regional planning and funding structure that overarches individual structures. This overarching structure sets priorities and coordinates the work of individual agencies, including providing the venue and organizing the processes for making regionwide decisions about fundraising, marketing, and programming.

Commonly, each of the key participating agencies’ boards sends representatives to sit on the overarching entity’s board (often these representatives are a mix of board members and chief executives). But the overarching entity’s board also includes members from outside these operating agencies, such as members of the community at large (e.g., local-issue activists) who have equal standing with agency representatives.

We see similar dynamics in many other areas of political and programmatic action: in urban redevelopment, in neighborhood revitalization, and in emergency services. In all these areas, overarching governance systems make strategic, community-level decisions that form the basis upon which individual agencies develop and implement their own plans and operations.

New Leadership and Accountability Models

Valuable as it is, we must acknowledge the unique challenges for accountability that this new dimension of governance poses. It’s hard enough to hold a typical nonprofit board accountable for its organization’s performance and impact—it is even more difficult to implement systems of formal command-and-control types of accountability for this new level. The more diffuse and fluid nature of these designs makes them inherently hard to control (which is why relational influence is so important). In reality, the locus of accountability for this new level of governance must exist “above” the individual nonprofit—at the community level—yet many philanthropic and governmental funders and regulators are likely to hold individual nonprofit agencies accountable for such community-level performance and impact. And they will often be frustrated in their attempts to do so, because there is too little leverage at the level of the individual agency. This challenge becomes especially confounding in light of federal and state legislative discussions about nonprofit accountability and regulation, essentially all of which treat the nonprofit organization as the primary unit of control.

Clearly, this new mode of governance has significant implications for the next generation of nonprofit board work. The ability to perceive this new level of operation is unique, requiring a multilevel systems perspective and a different (albeit increasingly evident) “mental model.” It requires different kinds of knowledge, skills, and abilities. This is the work of leadership, not management. So it is essential for its participants to become proficient in a different kind of leadership, particularly in the capacity to network, to build multifaceted relationships across boundaries and among diverse groups of people, and to effectively exercise influence in the absence of formal authority. (In his book On Leadership, John Gardner aptly described this as “exercising nonjurisdictional power.”4) As Peter Senge et al. explain in their 2015 article “The Dawn of System Leadership,” such leaders grow to balance short-term, reactive problem solving with long-term value creation, and to recontextualize organizational self-interest; they “discover that their and their organization’s success depends on creating well-being within the larger systems of which they are a part” as they catalyze collective leadership.5

This is such an interesting time in the evolution of nonprofit governance and our understanding of the work of nonprofit boards. While some still bemoan the absence of anything innovative or cutting-edge in the world of nonprofit governance, the reality is that we have already grown a new generation of adaptive nonprofit governance—one that is more effectively aligned with and responsive to the requirements of the organizations that come together to address the most dynamic and complex needs and challenges confronting our communities. Indeed, this new generation of governance inherently involves a changing mode of community leadership, as society moves from hierarchy to networks as the prevailing mode of organizing to meet the demands of a new time. And in this evolution lie the seeds of responsive leadership and governance in service to our communities. This is the future of nonprofit and public-service governance.

Notes

  1. John M. Bryson, Barbara C. Crosby, and Melissa Middleton Stone provide an excellent review and discussion of the research on the public sector–nonprofit forms of such collaborations, in their 2015 article “Designing and Implementing Cross-Sector Collaborations: Needed and Challenging,” Public Administration Review 75, no. 5 (September/October 2015): 647–63.
  2. As initially popularized by John Kania and Mark Kramer in “Collective Impact,” Stanford Social Innovation Review 9, no. 1 (Winter 2011): 36–41.
  3. Luther P. Gerlach, “The Structure of Social Movements: Environmental Activism and Its Opponents,” in Waves of Protest: Social Movements Since the Sixties, eds. Jo Freeman and Victoria Johnson (Lanham, MD: Rowman & Littlefield, 1999), 85–98.
  4. John W. Gardner, On Leadership (New York: Free Press, 1989).
  5. Peter Senge, Hal Hamilton, and John Kania, “The Dawn of System Leadership,” Stanford Social Innovation Review 13, no. 1 (Winter 2015): 28.

New Years Resolutions for Boards

By Gail Perry | January 6, 2020

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Reprinted from Fired-Up Fundraising.

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It’s the New Year—and it’s a great time to make smart resolutions for the future!

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This post is updated from posts I wrote in 2018, 2017, and 2015. It’s a perennial favorite with my readers—so we’ve updated it again for 2020!

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Here are some ideas for nonprofit board members—to help everyone get started on the right foot for the year and keep on track as we launch into the new year.

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You might find that these ideas will open up some interesting discussions—about expectations, attitudes, and actions needed from ALL board members.

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How about these for a list of New Years Resolutions for Board Members? Here’s what board members might want to resolve for the coming year.

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1. I will encourage everyone to think big.

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As a board member, I know that thinking small will not get us where we want to go.

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We are not going to change the world, save the environment, feed the hungry, change our community, find a cure—by thinking small.

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So I will think big. I understand that there is great power in a big, wildly exciting vision. 

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Because a big juicy vision will help attract people—and financial resources—to our cause.

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2. I will have a bias towards action.

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Knowing that my organization needs more than talk out of board members, I will focus on positive actions that I can take.

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I refuse to be one of those board members who thinks their job is simply to come to meetings and just offer an opinion.

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I will ask the ED and our staff what they need the board members to actually DO this month, this quarter, this year.

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Taking action will be more fun and will create much better results!

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3. I resolve to understand our numbers.

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I promise to spend some time understanding the data about how we raise money and how we spend it.

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I want to learn more about where our money really goes.

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I want to learn about my organization’s fundraising plan and our funding/business model.

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Like Tom Peters said,

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“Without data, I’m just another person with an opinion.”

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I will learn more about my role as a fiduciary guardian of our nonprofit.

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4. I will support our fundraising program and our annual fundraising plan.

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I understand that there are many ways I can support fundraising and help celebrate our donors.

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Since fundraising is not just just about asking for money, I know I can play a valuable role even if I am not out there soliciting (by opening doors, making connections, meeting prospects, thanking donors, involving new people, etc.).

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I understand my various fundraising responsibilities as a board member.

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I will help foster an organizational culture that will support philanthropy 

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I’m interested in educating myself about fundraising—how it works today and what works best for us

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I won’t suggest a new fundraising idea or project without first understanding its potential impact on our staffing and volunteer resources.

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5. I will be optimistic, no matter what!

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I will be the board member who believes in abundance, and sees the glass half full.

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Knowing that negativity is self-defeating, I will discourage everyone from handwringing and naysaying.

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I know that negativity wipes out all our energy and passion.

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I resolve to be the board member who has the point of view of abundance rather than scarcity.

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And I hope to influence the rest of my fellow board members.

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I will encourage a positive, can-do attitude—because THAT is what can change the world.

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6. I will go back to my vision again and again.

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I know that my vision of a better world will help to keep me energized, focused, passionate, and results-oriented.

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So I will stay focused on my vision of what’s possible and how our organization is making it happen.

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If any of our board members feel jaded or bored, I’ll encourage them to remember why they really care about this cause and our organization.

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I’ll do my best to keep the fires of passion and energy burning brightly.

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7. I will dare to challenge the status quo.

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Knowing that change is hard for all organizations, including ours—I will be open to new ideas and new ways of doing things.

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I will encourage my fellow board members to be willing to let go—no matter how threatening change is.

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I will remember Jack Welch’s famous quote:

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If change is happening outside the organization faster than it is on the inside, the end is near.”

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I resolve to be willing to ask, “Why are we doing this?”

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8. I will make my own proud, personal gift to support my organization.

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AND I will encourage the other board members to give.

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I understand that if we don’t put our money where our mouth is, we have absolutely no credibility.

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I resolve to set an example by giving cheerfully and generously.

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9. I will support our CEO and staff.

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I will not ask the staff to overwork themselves, or sacrifice their personal lives in the name of our cause.

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Understanding that they carry enormous responsibility on their shoulders, I will support paying them competitive salaries, and giving them a healthy, happy workplace.

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I resolve to support an appropriate boundary between board members and staffers. This means that I will not attempt to direct individual staff members. Instead I will deal with their boss, our CEO.

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I resolve to show up. To return their phone calls and e-mails.  And help out when asked.

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10. I will be a “sneezer” and advocate for our cause wherever I go.

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Knowing that ideas can be contagious and spread among people like viruses—I will “sneeze” wherever I can, and share good news about our work when I meet a potential supporter.

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Above all, I want to help create an epidemic of buzz about my organization all around.

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I resolve to be a terrific personal advocate for our organization and our cause. And I”ll have fun doing it!

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Bottom Line on New Years Resolutions for Board Members

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I don’t want to mess around as a board member. Certainly, I don’t want to waste time in meaningless meetings that are all talk and no action.  For the coming year, and all years, I dedicate myself to making my service on the board meaningful.

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Exit Agreements for Nonprofit CEOs: A Guide for Boards and Executives

 and  | January 13, 2020

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Excerpt from “It’s Time” by Kevin Sloan/WWW.KEVINSLOAN.COM

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When the founder or longtime executive of a nonprofit leaves an organization, the board often grapples with how to say goodbye and thank you. This question is loaded with complexities—feelings and relationships come into play, as do financial, legal, and reputational risks and rewards. There is a range of motivations for considering an exit agreement, some quite compelling. The executive, for instance, may seek a financial acknowledgment that he or she has skillfully led the organization over a long tenure—and maybe for a salary well below market rate. Still, actions that might have strong support within the board and meet the needs and expectations of the executive might not play well with the IRS, a state attorney general, or in the court of public opinion.

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This article is intended to offer readers a context and a set of choices in considering whether an exit agreement is needed and, if so, what might be included. Because this is a relatively new area of exploration for the sector, each situation brings unique features, and broad generalizations aren’t possible. What we offer here is a framework for:

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  • Distinguishing between different types of agreements, and when and how they are best used (e.g., an employment agreement, a separation agreement, or an exit agreement);
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  • Sharing case experience about the presenting situations where an exit agreement may be appropriate and the key considerations in exploring and shaping such an agreement;
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  • Understanding the legal and risk management questions that require attention in considering an exit agreement; and
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  • Providing an introduction to additional resources that may be helpful in considering this topic.
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Whatever elements you end up putting in your exit agreement, we must stress the importance of seeking legal review of any draft exit agreement by an attorney who is licensed in the state where your nonprofit is located and also well versed in nonprofit law and IRS regulations. As you will see below, it is no simple task to construct an agreement that meets the noble goals of the agreement, protects both parties, and conforms to the myriad laws and regulations governing its terms. Professional advice is recommended.

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Perspectives on Exit Agreements

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Our writing team comes at this article from two perspectives. Two of us are leaders in developing an approach to successful executive transitions for the sector, and one of us is a thought leader in the field of nonprofit risk management, helping boards and executives better understand the consequences of risk taking and the legal and other risks that arise from governance, strategy setting, and operations. An unshakeable tenet of successful executive transitions is the following simple fact: to have a good beginning with a new executive, it is important to have a good ending with the departing executive. Too many transitions become strained because of lack of attention to what comprises a good ending for an executive—particularly a founder or long-tenured leader.

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Clients regularly ask us for help in drafting exit agreements with departing executives. (For purposes of this article, we will use “founder,” “CEO,” and “long-tenured executive” interchangeably, to mean an executive who has had a major role in shaping an organization, either in its founding and long tenure or through leadership during a long tenure.) An exit agreement, as discussed in this article, differs in several respects from a separation agreement and release. (For information on the latter type of contract, please see the sidebar, below.) How many departing executives receive an exit agreement and what the terms are generally are unknown. The terms of these agreements are considered confidential, and unless a party to the agreement intentionally or inadvertently violates the confidentiality provisions in a typical agreement, they are not available for inspection. In our experience, only a small percentage of CEO departures are governed by the terms of an exit agreement. The use of exit agreements occurs most often under circumstances that we will describe below. Most are drafted by an attorney working with an executive, a few board leaders, and perhaps an accountant who specializes in nonprofit compensation and law. In some cases, the CEO and the nonprofit retain separate legal counsel during the negotiation of an exit agreement.

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Separation Agreements: Different Purpose and Rules

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An exit agreement, as explored in this article, differs in several key respects from what is called a separation agreement and release. The latter refers to a contract whose principal purpose is to limit the legal exposure of the employer to claims alleging wrongful termination, breach of an implied or written employment contract, and other claims from employees departing under less than ideal circumstances. A separation agreement and release is a legally enforceable contract that commits the organization to compensate the departing employee in exchange for a promise by the employee not to bring legal action against the employer. Typical separation agreements contain additional provisions beyond the promise not to sue. For example, a separation agreement may contain a non-disparagement clause and a requirement that the departing employee keep certain information confidential or return the organization’s property.

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Exit agreements (as discussed in this article) and separation agreements are consistently similar in several respects. First, if properly drafted, they are legally enforceable contracts containing obligations applicable to both the departing executive and the nonprofit. Second, both types of contracts include consideration: a sum payable to the departing employee offered in exchange for the commitments made by the executive in the contract. Lastly, neither form of contract should be executed by the nonprofit without first obtaining legal review.

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The areas where these agreements are often decidedly different include:

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  • Motivation. The principal motivation to negotiate a separation agreement and release is the desire to reduce the likelihood of a legal claim against the nonprofit, whereas the motivation to negotiate an exit agreement is to reward a founding or long-term executive and ensure a fair and appropriate ending to a long-term employment relationship. Legal counsel to nonprofits often recommend that a separation agreement and release be used any time the risk of a wrongful termination claim is more than minimal, assuming the nonprofit has the financial wherewithal to provide the consideration required for the contract to be enforceable.
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  • Required contract terms. An exit agreement is likely to be enforceable as long as it contains the necessary component parts of any legally enforceable contract: an offer, acceptance, and consideration. In contrast, a separation agreement and release must contain additional sections to render it enforceable in a court of law, and additional requirements apply when the departing executive is over the age of forty. These latter requirements arise from the Age Discrimination in Employment Act of 1967 (ADEA), as amended by the Older Workers Benefit Protection Act of 1990 (OWBPA). Those laws require that when the separation of an employee over the age of forty is governed by a release, certain procedures must be followed to ensure that the employee wasn’t coerced into signing the release. The ADEA, as amended by OWBPA, sets out specific minimum standards that must be met for a waiver to be considered knowing and voluntary, and, therefore, valid. Among other requirements, a valid ADEA waiver: (1) must be in writing and be understandable; (2) must specifically refer to ADEA rights or claims; (3) may not waive rights or claims that may arise in the future; (4) must be in exchange for valuable consideration; (5) must advise the individual in writing to consult an attorney before signing the waiver; and (6) must provide the individual with at least twenty-one days to consider the agreement and at least seven days to revoke the agreement after signing it.
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Presenting Circumstances

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The following are the presenting situations where, in our experience, exit agreements are most common:

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  1. A long-tenured executive or founder has accepted a below-market salary for many years. Or, he or she has received minimal or no retirement benefits from the organization and is playing catch-up to prepare for retirement. Sometimes the conversations about these dilemmas start one or two years before the hoped-for retirement; more rarely, three or more years in advance. The point at which this situation is addressed dramatically impacts options, as we will discuss below. The more years there are before exit, the more options there are to address past inequities.
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  3. The board wants to motivate a valued executive to stay for a defined period of time. For instance, an organization may want its executive to remain in place to complete a capital campaign or to be part of winning a major multi-year government contract. The organization may use an exit agreement with certain defined benefits as an incentive for the executive to stay longer than planned or to clarify the commitments of the executive and board as to how long the executive will serve.
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  5. The board makes an agreement with a departing executive that combines catch-up and fee-for-service after leaving his or her position. In some instances, the succession plan and transition to a new executive involves an internal successor. An extended overlap period or consulting contract for defined services is deemed mutually desirable by the departing and arriving executives and the board. An exit agreement can address both historical catch-up and the terms of any service beyond the start date of the new executive.
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  7. Sometimes an executive has been appropriately compensated, including salary and retirement. However, the board and/or the CEO want clarity and comfort with respect to the CEO’s legacy, the CEO’s continued involvement in any organizational activities, and/or the CEO’s availability to help on an as-needed basis. In this case, such a document might be a simple one- or two-page letter of agreement about things important to the CEO and the board.
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  9. Even when none of the above circumstances applies, an honorific for a long and successful tenure seems in order in the view of the board and/or the executive. The executive has received a decent salary, has adequate retirement savings in place, and will not be providing post-retirement services beyond orienting the new executive. But, as part of the process for bringing a healthy closure to the CEO’s productive tenure, a monetary gift seems to be an appropriate and customary element.
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There are many other ways to say thank you to an executive who has served an organization well. You may conclude that an exit agreement is not appropriate. (For other ideas on how to say goodbye and thank you, see sidebar at bottom.)

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Exit Agreements: The Four Types

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There are typically four reasons boards and executives explore the possibility of an exit agreement. These reasons correspond to the “type” or focus of an agreement. This section takes the four general types of presenting scenarios for exit agreements and explores each in more depth through case examples. The cases are fictional and represent a random compilation of multiple situations.

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  1. Catch-up. A monetary package acknowledging the executive’s salary has been significantly below market for a long period and/or the organization’s retirement contributions have been low or nonexistent:
    rn James was the founding executive of a human services organization, and built it from two staff and a $50,000 budget to a 130-employee, $5-million-net-worth leading service provider in his community. He served as executive for thirty-two years, and wanted to retire and move closer to his grandchildren when he reached age sixty-six. At age sixty, James recognized he had a problem. He had kept his salary below market for his position and region intentionally in order to hire more program staff. The organization had begun paying into his retirement account only five years earlier at a rate of 4 percent of salary per year. Even though his wife had a more generous retirement benefit, James faced the reality that he would need to work until age seventy-six to meet his personal retirement savings goals. Reluctantly, James raised this concern with the board chair, who agreed to convene the executive committee to consider what might be done.
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  3. Incentive to stay longer. As an incentive to encourage the departing executive to remain as executive for a defined time for purposes important to the organization’s welfare:
    rn Irene was the founder of an environmental organization, and served as its CEO for twenty years. She informed the board of her intent to retire in six months’ time. During this time, the organization was in the middle of negotiating a multi-year grant with a large institutional funder. When the board chair learned from the staff that the funder’s confidence in Irene’s leadership ability was fundamental to the successful completion of grant negotiations, he moved quickly to begin discussions with the executive committee about an arrangement whereby Irene would stay on past her intended departure date.
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  5. Post-retirement services. Essentially, a contract for services to be provided after the leader moves out of the executive role:
    rn Maybelle was the twenty-five-year founder of a child care center that served low-income families in an inner-city neighborhood. She had been tireless and highly successful in pursuing funding from foundations and from upscale donors who were attracted to her vision and tenacity for improving conditions for children and families in her center’s environs. Donors spoke of her “special gift” for moving them to want to partner with her in her work. As she was preparing to retire, she told her board she wanted to stay involved with the child care center. It was agreed that she would move into a role as “ambassador” for the program with a core focus on major donor acquisition and retention. The board agreed to pay her a retainer of $3,000 per month for her services.
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  7. Honorific. A memorial, in writing, recognizing or honoring a departing founder:
    rn Arturo was for thirty years executive director of a multi-service community center that had received numerous awards for its innovative programming for the neighborhood’s immigrant populations. After he gave his board eighteen months’ notice of his impending retirement, he and the board engaged in extensive planning to prepare for the handoff to his successor. A goodbye dinner that had city leaders and appreciative neighborhood residents in attendance fulsomely celebrated Arturo’s achievements. But a month after his departure, Arturo approached the center’s board chair to say he was seriously disappointedthat the board had not given him a monetary gift in acknowledgment of his tireless service to the neighborhood. He said such gifts were traditional, and had been given to departing executives he knew. The chair then sought advice from the search consultant they had used as to what was proper and customary.
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Key Considerations in Drafting Exit Agreements

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As intimated in the prior description of the four common reasons for negotiating an exit agreement, there is no doubt that many boards and executives find value in these agreements as elements important to successful CEO transitions. There are, however, some considerations worth addressing to increase the benefit and positive aspects of an exit agreement while diminishing the potential negatives. In this section, we will explore some of the important issues that should be considered prior to finalizing an exit agreement. After presenting each issue, we offer a series of key questions and tips for reflection.

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• Financial capacity. The decision to provide exit compensation for a long-term executive typically arises from a board’s desire to do something good and right. Many departing CEOs hope to be able to continue to serve the organizations they founded or nurtured even after their departures as full-time employees, so exit agreements are optimistic by nature. Among other things, they assume that the organization will continue along its current financial trajectory or even improve. In reality, the capacity of both parties to live up to the commitments in an exit agreement may change over time. The organization must have the reserves or ability to raise designated funds for this purpose so as not to impede future capacity to carry out its mission.

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For example, the commitment to make periodic lump sum payments to a departing executive may be in jeopardy if the nonprofit suffers a decline in unrestricted funding. Or, the assistance the executive was contracted to provide the organization under the new CEO turns out not to be needed.

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To appropriately consider issues related to financial capacity as it relates to the exit agreement, ask:

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What is the likelihood that a change in capacity could impair the nonprofit’s ability to provide the compensation, benefits, or other resources/support promised in the agreement?

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What steps can we take now in drafting the agreement to account for any changes in capacity (e.g., provide a single lump sum now rather than payments over an extended period, or include an “escape clause” that will enable the nonprofit to terminate the agreement in the event of a financial catastrophe)?

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Does the agreement provide for any opportunity to renegotiate its terms, should either side be unable to live up to the commitments contained therein?

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• Private inurement risk. Tax-exempt organizations must operate in a manner consistent with their charitable purpose. “Private inurement” refers to the impermissible transfer of assets from a charitable organization to insiders or disqualified persons who have significant influence over the organization. One example of impermissible private inurement is the payment of more than reasonable compensation to a CEO of a nonprofit. If payments to a CEO are beyond what the market calls for, CEO compensation may be deemed to be excessive compensation, thereby putting the nonprofit at risk of IRS-imposed fines and penalties on the organization and the individual board members who approved the payment of excessive compensation. The penalties tend to be levied first and foremost on the recipient of the excessive compensation (e.g., the CEO). In extreme cases, the IRS may revoke the tax-exempt status of the organization that has violated tax law by transferring the assets of an organization operating in the public interest to a private individual. The risk of IRS action over impermissible private inurement only applies to 501(c)(3) and 501(c)(4) organizations under the Internal Revenue Code.

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Consider the tips below to weigh the potential that payment(s) to a departing executive could trigger fines or penalties under IRS rules related to excessive compensation:

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Give careful consideration to the basis for determining the amount of the payment. Use the “measure twice, cut once” rule of thumb before approving the payment.

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Ensure that the board is independent, or that an independent committee is authorized by the board; the group will deliberate and vote on the decision about whether and how much to pay an outgoing executive. To prevent bias and preserve independence, the individuals on the board or committee should not be related to the CEO, nor should they have significant personal relationships with the CEO.

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Carefully document the steps taken to determine the amount of exit compensation to be given, and evaluate its reasonableness, including the use of surveys, salary studies, or other compensation data that was obtained and relied on. If your nonprofit hasn’t recently purchased a salary study or undertaken a compensation review, consider doing so before finalizing an exit agreement. This action affirms the reasonableness of the exit compensation by supporting it with comparable market data.

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Make certain that the full board is aware of the details of the exit agreement, including the financial terms and research/basis for determining that the payout will not be considered excessive compensation by the IRS. Document the board’s action taken to approve the final exit agreement.

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• Stakeholder dismay. News reports of “golden parachutes” paid to outgoing corporate CEOs are rarely if ever met with thunderous applause from anyone other than the executive’s immediate family. Although after careful deliberation a nonprofit board may decide that providing a one-time lump sum or series of payments to the outgoing CEO is the fair and appropriate thing to do, the stakeholders of the nonprofit may see it differently.

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To manage the potential that internal stakeholders (staff and volunteers) or external stakeholders (clients, funders, regulatory bodies, or the public) may be concerned when they learn of the payment to a departing CEO or the terms of an exit agreement:

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Negotiate the terms of the agreement with an expectation that the executive’s compensation will be known to stakeholder groups. The latest IRS Form 990 requires all types of nonprofit executive compensation to be reported. Form 990s are available for public inspection.

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Draft talking points about the board’s process and rationale for offering the benefits in the agreement in order to have them on hand in the event they are needed.

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• Contractual considerations. The risk of a breach of contract claim arises any time an organization enters into a contract with another party. Breach of contract claims brought against a nonprofit are typically excluded under nonprofit liability insurance policies, which means that the nonprofit will not have insurance to cover the cost of defending such a claim.

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To minimize the risk that a former CEO will bring a claim for breach of an exit agreement:

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Use clear and unequivocal language in the exit agreement. The deliverables should be easy to understand by both parties as well as any dispassionate, third-party reviewer.

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Make certain that the promises made in the agreement are ones that the nonprofit is confident it can fulfill.

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Don’t include an alternative dispute resolution (ADR) option in the contract unless you have a clear understanding about what is involved, including the cost. Although ADR methods (e.g., arbitration and mediation) are generally seen as less expensive than litigation, the cost of using these methods can be substantial.

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Include an “escape clause” that specifies under what circumstances the agreement, or components of it (such as the obligation to pay a consulting fee), will be void. For example, the nonprofit may have grounds to stop paying a consulting fee to a former CEO if the departing CEO fails to take direction from the successor or is unwilling or unavailable to live up to the terms in the contract.

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Always obtain legal review of a draft exit agreement before executing the agreement or asking the departing CEO to sign. Both parties, not just the nonprofit, should have legal counsel review the agreement.

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• Disclosure to incoming CEO. The terms of an exit agreement with a departing CEO are likely to be negotiated before the new CEO begins his or her service at the nonprofit. Nonetheless, the new CEO will likely become aware of all contracts, including any contracts with the departing executive. Therefore, one of the risks is that the new CEO will expect a similar set of benefits and compensation when he or she departs the nonprofit. We encourage boards to disclose the terms of an exit agreement to an incoming CEO.

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To manage the potential of false expectations:

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Disclose the terms of the agreement with the departing executive with the new CEO and explain the rationale behind the exit agreement, such as the role of the departing leader as the founder of the organization. Stress the unique nature of the agreement.

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Avoid a replay of the scenario that necessitated an exit agreement by addressing the compensation conditions in the organization that resulted in, for example, an executive paid below market value and underfunded for retirement.

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• Internal equity. Another important consideration is whether the proposed agreement with the departing executive is so different and out of character as to raise serious internal equity and morale issues. If the purpose is retirement catch-up, for example, what is the organization able to do to improve employer-paid retirement benefits for all managers and staff?

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Examples of Approaches to Exit Agreements

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Because exit agreements are confidential, it is difficult to provide many details and examples. The following are examples of exit agreements as reported secondhand from knowledgeable consultants and attorneys. Not every example follows all the guidance above. There is no one, rigid guideline, so there exists a wide range of examples in most communities. The best way to learn more is to request an informational meeting with an attorney or tax accountant who specializes in deferred compensation and/or exit agreements for executives in the nonprofit sector.

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Example 1: Catch-Up
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A long-serving executive worked without pay for a number of years. Her financial situation changed as she approached retirement age. The board increased her salary within the limits of reasonable compensation, provided the maximum retirement benefit allowable under pension law, and agreed to retain her for five years after retirement as a consultant to advise on specific areas where she had expertise.

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Example 2: Incentive to Stay Longer

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At the request of the board, a long-serving executive agreed to continue to serve until age seventy-three, four years longer than his original retirement plan. The organization’s primary funder had been awarding major contracts through a request-for-proposal (RFP) process every four years. The current RFP process had been delayed twice, thus delaying the executive’s departure. In exchange for these additional years of service, the board agreed to continue to pay health insurance costs and make an annual payment for five years past retirement.

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Example 3: Post-Retirement Services

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After twenty-years, the founder of a regional clean water agency dedicated to removing all pollutants from the area’s streams and lakes had grown weary of the fundraising and administrative duties that consumed most of her time. However, her passion for pursuing the agency’s mission was undiminished. She asked to become a half-time lobbyist for her agency in the state legislature. The board agreed to move her into that position, with the stipulation that she would be supervised by her successor. They set her salary at $40,000 per year.

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Example 4: Honorific

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Aware that their retiring executive and his wife were avid travelers, as a departing gift the board of directors gave him a $5,000 “voucher” for use with the travel agency of his choice. The board paid for the voucher with funds donated by board members and a few longtime individual donors.

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An exit agreement with a departing nonprofit executive is a tool that can bring clarity to uncertainty about the departing leader’s post-CEO role with the nonprofit. In other cases, an exit agreement can be a tool for providing a catch-up financial contribution that recognizes, in part, the achievements and service of an undercompensated leader. Or, it can be a tool for saying thank you. But whatever the purpose or motivation behind the agreement, there are important considerations that must be examined in order to make certain that the final agreement is fair, appropriate, and legally defensible.

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Ideas for Saying Thank You and Goodbye

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Planning a farewell for a revered leader is personal. Each departing executive has preferred ways of giving and receiving recognition, praise, and goodbyes, as do the board members and staff who will organize the goodbye events. The planning requires sensitivity, skill, and, often, patience. And if the executive happens to be the founder—or founder-like in tenure and transformational impact—the stakes can be especially high.

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Organizations that have successfully paid tribute to their departing executives tend to work from the following principles:

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  • Consult the executive in the planning and define a comfort zone that is win-win for the executive and the organization.
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  • Involve in the planning people from the board and staff who communicate well with the executive and understand the conditions for success from the executive’s perspective.
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  • Brainstorm creative ways to make the farewell memorable, fun, and meaningful for all parties—the executive, his or her family, the board, staff, and other celebrants.
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A typical goodbye or thank you involves one or more events. Here are some examples:

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  • Organization A held three events for its outgoing executive: a small dinner with past board chairs with whom the executive had worked over two decades; a staff event organized by the management team; and a community-wide party where funders, government officials, clients, and their families could all come and say thank you.
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  • Organization B, a community development organization, had both a staff-only event for its longtime leader and a Saturday picnic to which the whole community was invited. The large public party had been specially requested by the community-focused leader.
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  • Organization C had a more traditional dinner and reception, with speakers who were meaningful to the executive and participants.
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In selecting a gift for a departing executive, boards pay attention to what he or she enjoys and does for fun. Luggage for traveling, a cruise, and season tickets to a sports or arts series are examples of thoughtful gifts.

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Departing an organization is a challenging and emotional event. Executives leave behind people they have enjoyed working with for many years. A well-planned farewell and thoughtful gift are often important contributions to a positive separation experience.

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This article is from the Fall/Winter 2013 edition of the Nonprofit Quarterly, “Networks & Leadership: Emergence and Transitions.”

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Click here for link to original article.

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Beyond Financial Oversight: Expanding the Board’s Role in the Pursuit of Sustainability

by Jeanne Bell | January 6, 2020

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This article is reprinted from NPQ’s spring 2011 edition, “Governing amid the Tremors.” It was first published online on April 26, 2011.

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Throughout the ten years prior to the recession, it seemed that whenever anyone talked about boards and finances in the same sentence they were making a point about accountability. They were warning us that our Form 990s were now on GuideStar, so we’d better make sure that our boards were reading them. They were telling us to have an audit committee and a “Conflict of Interest” policy. They were telling us that we should study Sarbanes-Oxley and apply whatever we could to our own boards. They were making constant reference to a handful of nonprofit fraud cases, suggesting that this was what awaited us if our boards did not get very serious about oversight and accountability.

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Now, as community-based organizations continue to weather the severe, and in many cases permanent, shifts in their operating environments caused by the recession, those accountability concerns seem downright quaint. The truth is that one of the roles that most decently functioning boards play quite well is providing financial oversight. Compared to other board functions, financial oversight is relatively clear: there is a dedicated officer role, the treasurer; nearly all boards have a finance committee; and there are tangible products such as an annual budget to approve, financial statements to distribute, and an auditor to select.

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The problem is none of those tangible products in and of themselves has anything to do with nonprofit sustainability. And it is sustainability that is keeping executive directors up at night, not financial oversight. In a new book I coauthored, Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, my colleagues and I define sustainability as being both programmatic and financial:1

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Sustainability encompasses both financial sustainability (the ability to generate resources to meet the needs of the present without compromising the future) and programmatic sustainability (the ability to develop, mature, and cycle out programs to be responsive to constituencies over time).

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In other words, board finance committees can look at annual budgets, financial statements, and audits forever, but if some group of board members is not considering those financial results in light of the organization’s programming mix and its results, then their efforts are very unlikely to contribute to sustainability.

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Our boards, not unlike many of our staffs, are artificially siloed into groups that consider financial results, groups that consider programmatic results, and groups that consider fundraising results. Yet, for those of us without an endowment or many wealthy annual donors, program results in large part drive financial results. It is how many clients we case-manage that yields a particular contract reimbursement. It is how many units of housing we build that yields a particular developer’s fee. It is how popular our new play turns out to be that yields a particular box office revenue. And just as critically, it is how many people respond to our direct mail campaign and to our special event invitation that determines how much subsidy we can raise for programs that don’t cover their own costs. Put another way, if the board finance committee doesn’t like the financial results it is seeing as it provides oversight, what is it going to do about it? It has to look to the programs and the fundraising activities of the organization to yield different financial results; that’s the only way to make the financial statements say anything better.

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So while financial oversight is absolutely critical, it is hardly sufficient. Boards of directors charged as stewards of an organization have to be fundamentally knowledgeable about and actively engaged in the business models of the organizations they govern. And nonprofit business models are typically the antithesis of siloed; they are instead a very interdependent mix of programs and fundraising activities that work together to achieve a set of impacts and financial results. How engaged are most boards in that interdependence? And if they are not engaged, how can they meaningfully assist with the dogged pursuit of sustainability in which so many of their executives find themselves?

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The complex challenges facing community-based nonprofits require that we shift our mental model from boards being primarily about financial oversight and accountability, to boards being concerned in an ongoing way with the financial sustainability of their organizations.

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Is Your Board Sustainability-Focused?
If you are considering making the pivot from an oversight orientation to a sustainability orientation, consider using these discussion questions to start off the conversation at your next board meeting:rn

 

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  1. How financially literate are we as a group? If we have knowledge gaps, how will we work together to close them, and by when?
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  3. Is our finance committee engaging in the key business-model questions facing our organization, or is it focused primarily on monitoring budget variance and preparing for the audit?
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  5. What major sustainability decisions are before us as an organization, and how will we structure our board and committee-meeting agendas over the next three to four months to ensure we make those decisions effectively?
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  7. Overall, how healthy is our organization financially? Is it healthier today than it was three years ago? Why or why not? When our board terms end, where do we want to leave the organization financially?
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  9. How strong is our partnership with staff leadership around issues of sustainability? Are we sharing information and ideas across staff and board in a way that truly leverages our individual and collective strengths and networks as board members in the sustainability pursuit?
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When pivoting a board of directors from a strictly oversight orientation to a sustainability orientation, there are a number of things to consider. For instance, a board with a sustainability orientation requires board members who are financially literate. By this I mean that everyone has, or is actively developing, an understanding of the financial statements they receive. They have the fluency, for instance, to ask how a core program is performing both financially and programmatically. If only two or three people on the board can read the financial data, the board is unlikely to have holistic conversations that take both mission impact and financial return into account. With a sustainability orientation, financial statements become a useful tool in the ongoing discussion of where the organization should go next rather than merely reports that the treasurer assures everyone she has reviewed on their behalf.

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Practically, this means that board chairs and executives need to team up in creating a board culture that expects and supports financial literacy from all members. During the recruitment and orientation of new board members, thorough and transparent discussion of the organization’s business model and its current financial challenges and opportunities should be central. A board with a strong sustainability orientation will most likely pass on the potential recruit who uses stale language such as, “I am not a numbers person. I leave that stuff to the treasurer.” The response should be, “Our board is focused holistically on the sustainability of this organization, so everyone engages with our financial results. We will train you and support your development as a financial leader, but you have to be committed to our stance on this point to be successful on this board.” In addition to this kind of strategic recruitment and orientation, board chairs and executives should prioritize financial training opportunities and consider mentoring among board members to support members who are in active development of their financial literacy. Once a year, all board members should receive a one-hour refresher on how to read and interpret the organization’s particular set of monthly financial statements.

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To signal and reinforce this sustainability stance, chairs and executives should consider renaming their finance committees and adding nontraditional members—folks who are financially literate but who have program or fundraising as their primary orientations, for instance. A board committee called “Finance and Sustainability” that is composed of both finance experts and programmatic folks actively engaging with the business model’s concerns will support the pivot to a “beyond oversight” board. When a diverse group of members is reviewing and discussing the numbers, not only can it go beyond merely reporting to the full board how close to its budget the organization is or is not, it can also frame for the board the questions of “why?” and “what might we do about it?” With this approach, the treasurer role evolves from that of a CPA, who is among the only people able and willing to review financials, to a full leadership role that supports the full board’s meaningful focus on the complex questions and difficult decision making of the sustainability pursuit.

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Another key shift required for a sustainability orientation is the normalizing of profit. Profit, like program impact, is fundamental to sustainability. A board of directors that is uncomfortable budgeting for surplus and unwilling to face the brutal facts about the prospects for profitability of core activities is not operating with a sustainability orientation. It is important not to conflate profitability with earned income, however. Many community-based nonprofits achieve profitability—that is, consistent annual surpluses—through a mix of earned and donated income. A special event can be just as profitable as a fee-based service to the community. The key is for boards to be looking for profit wherever it can be generated in the model, and to be ensuring that, as a set, the organization’s activities yield more than they consume.

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Through the recession, many leaders have had to face the reality that they can no longer subsidize core activities that do not cover their own costs. The fact that an activity is core to an organization’s mission and very needed by its constituency does not necessarily mean that the organization can afford to keep it in its business model. So many executives I talk to now lament not having faced those realities sooner. I attribute this reticence to act on unsustainable deficits in part to boards of directors not deeply engaging in why and how their organizations were incurring deficits. That is, they didn’t deeply understand which activities in their business models were losing money, and how much; instead, they talked in macro terms about the organization’s overall “not hitting budget.” Part of pursuing sustainability is determining the desired profitability of every core activity—programmatic and fundraising. While most community-based organizations will elect to subsidize a handful of money-losers—allow the profits from an annual event to offset the losses in the government-funded job training program, for instance—the board should be very clear on these decisions and ensure that those subsidy decisions do not result in deficits for the organization overall.

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The nature of financial plans and reports shifts too with a sustainability orientation. Ironically, the classic tools of annual budget, monthly financial statements, and an audit can actually keep a board focused on oversight rather than business model sustainability. When boards focus too much on annual budget variance, for example, I find that they are often not sufficiently engaging in projection. Rather than focusing all of their analytical energy on how close the organization is to numbers it predicted six or eight months ago, members of the Finance and Sustainability Committee want to be anticipating the next several quarters’ results, too. We spend too much time providing oversight on things that already happened, and not enough time considering the financial road ahead. For-profits engage in rolling projection, and I believe that nonprofits should do this as well.

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Rolling projection moves the board of directors away from the silly obsession with “hitting the year-end budget” and toward the capacity to make earlier and better decisions given the economic forces happening in real time. Fiscal years are artificial time frames. All major decisions will have economic impact far beyond the current fiscal year. Put another way, it is just as important to have a good July as it is to have a good June. When boards focus only on predicting the coming twelve months (annual budget), monitoring variance from that increasingly outdated prediction (monthly financial statements with budget variance), and reviewing the past year’s statements (audit), they risk not actually engaging in the pressing and emerging business issues facing their organizations right now. Again, financial oversight is critical but insufficient for sustainability.

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A board that is focused on sustainability will be working a handful of key business-model issues all the time. In this economic climate, very few community-based organizations do not have to rethink some aspect of their business models. The Finance and Sustainability Committee members will partner with staff leadership to articulate those issues and find meaningful ways for the full board to understand them and, where possible, contribute to their resolution. For instance, the committee may come to the realization that the organization needs to close or transfer its drop-in program for teen dads because, while valued by the community, it has lost money for three years in a row, and its government contract is unlikely to survive the next round of county budget cuts. A committee member can partner with the executive director to craft a presentation to the full board, laying out the data and framing the key questions for board decision making: Are we prepared to end this program, and if so, by what date? Are there elements of this program that we can transfer to a collaborator or competitor? Are there financial implications of closing this program that we need to understand (for example, laying off staff, alienating a key funder, or losing the contract’s modest contribution to defraying overhead costs)? One board member can be engaged in reaching out to another community organization about the potential for program transfer; another board member can join the executive director in breaking the news to the government funder; and so on. In this fashion, the full board is actively engaged in decision making and execution on a business-model issue essential to the organization’s sustainability.

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For too long, too much of our boards’ finance focus has been on reviewing the past. For many nonprofits, this meant decision making was too slow in the face of the mounting recession. Modest reserves were depleted, and organizations were left exceedingly vulnerable during a time of great community need. The lesson of the recession is that boards must engage not only in financial oversight but also in the pursuit of sustainability. To do this well, boards have to be composed of financially literate members who engage in real-time analysis and focus on answering the complex business-model questions their organizations face today.

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Click here for link to original article.

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Notes

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  1. Jeanne Bell, Jan Masaoka, and Steve Zimmerman, Nonprofit Sustainability: Making Strategic Decisions for Financial Viability. San Francisco: Jossey-Bass, 2010.
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Three Reasons Behind National Voter Registration Day’s Off-Year Success

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By Ernie Smith | October 3, 2019

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In most states, 2019 is not an election year. But the annual, nonprofit-run National Voter Registration Day still got more than 400,000 people to register last month. Here are the secrets to the campaign’s success.

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Each September 24 since 2012, National Voter Registration Day has aimed to get as many people as possible signed up to go to the polls later in the fall. That job is a lot easier in even-numbered years.

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But this year, even with no presidential or congressional elections on the ballot, the campaign—formally endorsed by the National Association of Secretaries of State, National Association of Election Officials, and National Association of State Election Directors—well outpaced its usual off-year totals, registering more than 400,000 people to vote.

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What was the secret behind such a big tally? Three things:

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Celebrity endorsements on social media. A lot of big names were taking part to support the bipartisan initiative last week, including Tom Hanks, Lin-Manuel Miranda, and Leann Rimes. Major political figures on both sides of the aisle, including Michelle Obama and Newt Gingrich, also got involved. The campaign topped Twitter’s trending topics and helped generate nearly 100,000 tweets, many with a celebrity face attached.
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A huge number of partnerships. The event has high-profile partnerships with a large number of organizations, including nonprofits such as the Democracy Fund and National Council of Nonprofits; media giants such as BET Networks, MTV, and CMT; and large companies such as Postmates, Pandora, and Reddit. This year, the initiative was financially sponsored by (among others) Facebook, Google, Viacom, the Democracy Fund, and the Creative Artists Agency.

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A focus on the grassroots. While big organizations may make their mark on the big day, the real action was happening at the grassroots, with community events helping to drive voter registration last week. Supporters in Madison, Wisconsin, arranged pop-up registration locations, and in Chicago, events were held at local high schools. Atlanta, meanwhile, put up registration booths in the city’s main downtown transit hub.

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Lindsay Torrico, a member of the National Voter Registration Day steering committee, is optimistic that this year’s success signals a bigger trend.

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“We are encouraged by the level of engagement this local election year,” Torrico, the United Way’s senior director of policy and advocacy, said in a news release. “We are hopeful that this year’s success is a preview of what’s to come in 2020.”

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Click here for link to original article.

The Roles of The Board and Executive Director in a Strong Nonprofit

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Ellis Carter

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Ellis Carter is a nonprofit and tax-exempt organizations lawyer at Caritas Law Group as well as the publisher and primary contributor to Charitylawyerblog.

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The Roles of The Board and Executive Director in a Strong Non-Profit

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The Board/CEO relationship can make or break the success of a non-profit organization. The Board of Directors is the collective boss of the CEO/Executive Director of a non-profit corporation. However, to build a strong, successful, and sustainable non-profit, a much more nuanced understanding is necessary.

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The Board is responsible for “governance” of the non-profit, which implies final meta-level and long-term oversight and responsibility for finance, programs, and legal compliance.

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The CEO/Executive Director is responsible for the “management” of the non-profit, which implies day to day oversight of employees, programming, operations, and finance. However, the CEO also typically co-creates the long-term vision with the Board and helps to organize and manage the Board.

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Striking a Balance

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Non-profits usually err by going too far in one direction beyond this difficult balance. Either the Board “trusts” the CEO too much (often a temptation with a founding CEO, or very successful non-profit with a charismatic CEO), and thus underplays its role in oversight and vision making, or the Board meddles too much in employee and operational matters. The strongest non-profits include a strong partnership between the Board and CEO, in which a balance between the extremes is maintained.

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A good way to conceptualize the maintenance of this balance is to outline the responsibilities of the Board, responsibilities of the CEO/Executive Director, and shared responsibilities.

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Responsibilities of the Board include:

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1) Hiring the CEO and holding him/her/they accountable;

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2) Ensuring legal compliance;

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3) Ensuring proper financial safeguards and legal/ethical use of corporate funds;

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4) Ensuring that programs are effective and in alignment with the non-profit’s mission.

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Responsibilities of the CEO include:

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1) Hiring, firing, and supervising all other staff;

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2) Daily oversight of operations, finance, and programming;

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3) Serving as a liaison between the staff and the Board.

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Shared responsibilities of the Board and CEO include:

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1) Fundraising;

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2) External communications (although the Board should appoint one lead spokesperson, typically either the Board Chair or the CEO);

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3) Strategic planning;

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4) Board development.

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However, just because a responsibility primarily belongs to one entity, doesn’t mean the other entity will not be involved in the matter. For example, the Board may hire a law firm for representation in compliance or litigation (or an accountant for an audit), but the CEO and the staff will most likely be involved in providing the hired firm with necessary details.

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A useful distinction may be to conceptualize who provides final approval verses who provide input and/or implementation (this link provides a helpful chart to tease out this distinction). The Board/CEO should have final approval authority over their respective responsibilities. For example, although the Board approves the budget, including personnel expenditures, the CEO should have final authority, without interference from the Board, on who to hire or fire. Even if the Board is very fond of a Program Director, for instance, the CEO should have the autonomy to fire such person if they deem fit. Of course, the Board will hold the CEO accountable for results and can reward the performance of the CEO or terminate his/her employment. However, the CEO should be given freedom for all tactical, as opposed to the strategic, decision.

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In order to avoid dysfunction or potential liability issues, Board members and CEOs should remember their roles. Consider, for example, a case in which a board member has special expertise in a certain area that he/she/they volunteers to use to help the programming or operations of the non-profit. Say that a Board member is a retired accountant that volunteers to help staff updated their book-keeping systems. The Board member should remember that he/she/they is acting as a volunteer employee subject to the ultimate managerial supervision of the CEO. When working on book-keeping systems, the CEO is the boss, not the Board member, and the CEO must approve of the Board member involvement. Of course, maintaining such self-awareness and proper roles may be a lot to ask of human nature, but the more such roles are maintained, the stronger the non-profit.

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A final example of the budgeting process may also aid in the understanding of the delicate Board/CEO balance. The CEO/Executive Director develops, recommends, and implements the annual budget, but the Board approves the budget and provides accountability through report review of budget implementation. In this a strong relationship between Board and CEO is important. The CEO, with the aid of staff, develops a line item budget to present to the Board for its approval. Once the budget is approved, the CEO has tactical discretion for spending as long as spending does not overrun in any line item. For example, the Board may approve a line item expenditure of $10,000 for computers, but the CEO (with staff) decides what computers to buy, where to buy them, etc. (Note, however, the non-profits that are charter schools are subject to more complex regulations than non-school non-profits, especially regarding purchasing, and thus schools should consult their state’s charter school regulations).

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A healthy conversation and partnership between Board and CEO remain very important as there is nuance, even in the budgeting process. In approving line item and overall budget amounts, the Board sets the parameters for internal operations and thus has great influence upon them. For example, in setting personnel expenditure limits, the Board is influencing who the CEO can hire, and what tools he/she/they has to retain them. Thus, the Board, while maintaining the ultimate authority of budgetary approval, should give credence and weight to the budgetary recommendations of the CEO.

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A strong and healthy relationship between the Board and the CEO, with a clear understanding of roles, is the most important element in building and maintaining an impactful and sustainable non-profit organization.

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Cultivating a Culture of Philanthropy on Your Board

 
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Cultivating a Culture of Philanthropy on Your BoardAsk not-for-profit board members if they enjoy fundraising and their responses will vary widely. Some members are happy to participate if given the green light by their organizations. In my experience, however, many board members find soliciting donations uncomfortable or even distasteful. Some feel they don’t have the necessary personal connections or wealth. Or they say, “It’s just not my job.”

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Today, however, fundraising is everyone’s job if a not-for-profit is to be successful and sustainable. While charitable giving is growing in volume—now exceeding $410 billion in the United Statescompetition for those dollars remains fierce. The number of nonprofits vying for personal donations, corporate gifts, government grants, and other means of support is expanding. Meanwhile, the household giving that many small to mid-size nonprofits depend on has actually declined as a percentage of overall charitable activity.

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Donors are different today as well. They are not “your grandfather’s donor” who writes a check and expects little in return. Today’s best charitable givers want to be heard, to be involved in strategic direction and kept informed about how their dollars are put to use. They want to maintain contact and connection with people in the organization, including the board.

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Because of these changes, fundraising requires a much more sophisticated, multi-faceted approach. It must be core to an organization’s identity and must be a shared responsibilityone in which board members play a critical role.

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THE RIGHT MINDSET

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Fundraising starts at the top of the organization. The CEO or executive director, the board chair, and other leaders must prioritize and develop a systematic approach to soliciting donations and launching campaigns, then outline these initiatives as part of a comprehensive strategic plan. Without such a document, and clear messaging around goals and strategy, fundraising will not succeed.

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Each organization must also have a culture that embraces fundraising. Is everyone rooted in the mission and rowing in the same direction? When new leaders and staff are recruited, do they have a passion for their work? Is the mission central to all meetings, materials, and decision making?

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Fundraising success is also a matter of mindset. The CEO and leadership must frame it as something that is purposeful and rewarding rather than distasteful. In my view, raising money for something which you are passionate about is an honor and a privilege. It is something that you love to do, and successful not-for-profits embrace this philosophy.

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GETTING BOARD BUY-IN

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With the right organizational culture and strategy in place, the board, too, can play a meaningful role in fundraisingin soliciting donations but also in giving. Members themselves should expect to donate. They already invest time and energy for the cause, but contributing financiallyeven modestlyunderscores their commitment. In fact, many grant-making agencies will require 100 percent board participation in donating.

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It can be difficult for the CEO or chair to ask established board members to donate if they haven’t previously. Therefore, the governance committee (or executive committee in smaller organizations) must create and ratify a Board Expectation document that includes the stipulation that members make financial contributions. The document can be revisited and revised year after year. It can also be something that board members are measured by, in terms of how they have participated, attended meetings, and supported the organization. When new members are recruited, they will know that giving is expected along with other duties and responsibilities.

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As for soliciting funds, every board member should play a part. Some members will need support such as mentoring from the CEO or head of development. A board self-assessment can be a useful tool to gauge which members are suited to raise funds. Completed by the board itself or an outside party, the assessment inventories skills and abilities (for example, in the areas of strategy, marketing, IT, social media, etc.) and matches them to organizational priorities. The assessment process can also identify gaps that need to be addressed as new members are recruited.

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In addition, each board should establish a development committee if one does not exist, and staff it properly and ensure that it has ample time on the agenda of each meeting. Not only does this give committee members a clear, designated role in fundraising strategy but it puts philanthropy front and center every time the board congregates.

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LEVERAGING MEETING TIME

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On that note, board meetings are critical opportunities to build fundraising momentum. There are several ways to do this:

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  • Begin each meeting with a mission-based moment or story. This moment can be a personal experience or anecdote from a board or staff member that highlights the core purpose of the organization and reinforces the need for strong fundraising. It reminds members why they’re there in the first place. It answers the question, “Why does this organization exist?”
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  • Place development in the middle rather than at the end of the agenda, to make sure it gets needed attention. If fundraising gets short shrift on the agenda, it becomes a “nice to have” rather than a top priority.
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  • Have the development director or board chair give the fundraising report or update, to give it more authority and gravity.
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  • Get creative with the agenda. Meetings can include visioning exercises (e.g., “Where do we see ourselves in five years?”), motivational videos, or even board members from other organizations who can share stories of fundraising challenges and successes.
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Whether in meetings or on the phone with donors, board members should see fundraising as their duty and privilege. With a culture of philanthropy on the board, the entire organization benefits. 

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Click here for link to original article.

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Cultivating a Culture of Philanthropy on Your BoardJulie A. Rosen is leader of the Not-for-Profit Practice as well as a consultant within the Healthcare Practice of the executive search firm Witt/Kieffer. Based in the firm’s Boston office, Julie identifies C-suite and other senior leaders on behalf of hospitals, health systems, philanthropic and charitable foundations, social service organizations, national and international member associations, and other leading not-for-profits. Most recently, Julie served as executive director of the Schwartz Center for Compassionate Healthcare in Boston, a national not-for-profit organization advocating for enhancing the patient-clinician relationship.

Thoughtful Solutions for Reluctant Fundraising Board Members

 

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If you’ve worked at (or with) a nonprofit, you’ve struggled with your board members at some point. We all have. It’s normal! The relationship between nonprofits and their boards is that of checks and balances and strategy. Frustration happens.

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One of the most common sources of frustration is getting board members involved in fundraising. Many—maybe even most—nonprofits expect their board members to support their fundraising efforts both by donating and by taking on an active role in finding and recruiting donors. Getting board members to donate is pretty straightforward, but getting them to actively raise money for you is another thing altogether. Asking others for money is hard enough when you’re a professional fundraiser. Asking others for money when you have zero fundraising experience is intimidating.

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If some of your board members are reluctant or anxious about fundraising, try some of these methods to ease them into it:

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1. ASK BOARD MEMBERS TO SUGGEST POTENTIAL DONORS

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Your board members may be intimidated by asking their friends or families for support. While you work through that apprehension with them, try asking them to suggest a few individuals who may be interested in your mission. Your board members can help you come up with an outreach strategy you can tackle together.

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Once you’ve collected some names, work with your board members to determine the best way to approach those people. Should you write a targeted appeal to people your board members suggested? What about inviting those people to an upcoming event to learn more about your work? Could you set up meetings with those people to see if they’d be interested in getting involved?

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This can be a good opportunity to introduce your board members to solid fundraising methods. Instead of telling them to bring in new donors and leaving them to it, you can get started together.

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2. INVOLVE BOARD MEMBERS IN WRITING APPEALS

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Board members are fantastic resources when you’re putting together campaign appeals …  and not because they can share your appeal with friends and family.

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Your board members are a wellspring of ideas, stories, and testimonials that you can use in your campaigns. Instead of asking your CEO to write another appeal letter, get your board members involved. Instead of putting together a formulaic (and boring) appeal letter, ask your board members to get involved. Encourage them to share their stories and make their own appeals—the new perspective will be refreshing and appealing to your donors. Of course, you’ll want to have someone from your development staff guide board members through the process—they’re not professionals!—to keep things on track.

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Getting a fundraising appeal from a CEO or development director is pretty standard. Getting an appeal written personally by someone who’s so passionate about the cause that they serve on the board is more engaging. Try it! Your board members might not be seasoned fundraisers, but their stories are great fundraising tools.

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3. BUILD ONLINE FUNDRAISING PAGES FOR BOARD MEMBERS

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Every professional fundraiser has experienced the anxiety that often accompanies in-person asks. If it’s scary for you, imagine what it’s like for your board members!

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One way many nonprofits work around that anxiety is by setting up fundraising pages for board members. Using a peer-to-peer fundraising platform, each board member can set a fundraising goal, share her story, post to social channels, send fundraising emails, and more. It’s all digital, so the anxiety of in-person asks isn’t a problem. It’s also customizable, so each board member can make personalized appeals to his friends and family. Those personalized appeals feel authentic and natural (which makes them appealing to donors) instead of feeling stiff and formal (as in-person asks can sometimes be).

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Whether your board members are raising money for a one-time campaign or year-round, giving them digital fundraising tools can help ease them into fundraising.

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4. INVITE BOARD MEMBERS TO ATTEND MAJOR GIFTS MEETINGS

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Another great way to use your board members’ talents is to invite them to accompany you to meetings with major donors. You’ll want to let your major donor know about their presence ahead of time, of course, and only take them along if you feel it would be a strategic advantage.

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Done correctly, including board members in major gifts meetings can make your ask especially persuasive. A major donor knows that you’re asking for support, at least in part, because that’s your job. Having a board member who volunteers his time to support your organization speaks volumes! Your board member can share her story, explain why she were inspired to get involved, and share different perspectives about the impact you make with your work. A board member’s presence is powerful social proof, and social proof plays a big role in successful fundraising.

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CONCLUSION

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Getting board members involved in the fundraising process can be tough. They’re not professional fundraisers, so they’re not familiar with fundraising best practices or strategies. They might be anxious about asking their friends and their family for support—especially face-to-face—or they might not know where to start.

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Help ease your board members into fundraising by offering multiple ways to get involved. Get them involved in the fundraising process itself by having them suggest potential donors and sharing their stories in appeals. Invite them to share their excitement for your cause at meetings with donors. Give them digital tools they can use to raise money themselves. There are lots of options!

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Your board members are passionate about your cause and want to support you. Give them some guidance and watch what they can do!

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Click here for link to original article. 

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Abby Jarvis is a blogger, marketer, and nonprofit education manager forQgiv, an online fundraising service provider. Qgiv offers industry-leadingonline giving and peer-to-peer fundraising tools for nonprofit, faith-based, and political organizations of all sizes. When she’s not working at Qgiv, Abby can usually be found writing for local magazines, catching up on her favorite blogs, or binge-watching sci-fi shows on Netflix.