Boards - Your Chief Administrator Wants You to Learn and Practice CEO Evaluation

Ask board members to list their responsibilities and most will include the supervision of the CEO. However, according to the findings of CompassPoint and Meyer Foundation researchers as reported in Daring to Lead 2011: A National Study of Nonprofit Executive Leadership, there is apparently a disconnect between what board members acknowledge as their responsibilities and what they take on, because close to half of the CEOs surveyed reported that they had not had a performance review within the past year. Adding concern, of those boards that do ensure their CEOs are reviewed, more than two-thirds may not be particularly skilled at the process, judging by the report that fewer than one-third of CEOs found their review either somewhat useful or very useful.

With CEOs clamoring for effective feedback there are evaluation basics that every board can incorporate. Assign a month within which the CEO review will be done, add it to your compliance calendar and make a commitment to follow through. Ask the CEO to consider process and goals and to explain what he or she feels will make the review valuable on both a personal and organizational level. Gather input from the entire board. Then select a few board members to sit down with the CEO to negotiate what the review will consist of. Be sure success measures and deadlines are clearly defined so that everyone has a clear picture of what it will look like when the CEO has successfully met all expectations. Provide interim assessments that ensure everyone is still on the same page and that movement toward goal achievement is on track. (See “Evaluating the Top Administrator: A New Approach” for more.)

But what takes evaluation beyond the basics and ensures an effective result? I would like to learn what those boards that are providing “very useful” feedback are doing. I’d also like to hear from CEOs about what would make their reviews satisfying and helpful. Are there tips that you can share with your colleagues and partners? Perhaps you’ve asked a former board chair to lead the process or brought in a consultant to guide it. Maybe you’ve found a book or article that provided helpful insights into the process or content. All input is encouraged.

Rational Fundraising and Income

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Is This Task On Your To-do List? Miss It At Your Peril

One overlooked task of nonprofits is to make sure they are rational in their fundraising and income development work. Why is this overlooked? People don’t realize it is needed. Most people come to your nonprofit based on their emotions, that is, their passions.

Passions are an excellent starting point. It is how we select the causes we care about from the overstuffed cereal-aisle-full of nonprofit opportunities. What do we believe in? What made a difference to us? What will make a difference in our community? We choose based on emotions. We choose based on passions.

Passions get us in the door. While passions should not be forgotten, they do not make a good base for fundraising and income development work. Passions alone do not create income. Passions mixed with rational actions based on research, strategy, analysis and planning do create income.

How can you tell if your fundraising and income development work is rational?

Here are three keys to evaluate it:

Key One: Logical and Realistic Expectations. If you raised $100,000 last year from earned revenue, it is logical given similar efforts and a similar market, that you will raise the same amount give or take 10 percent next year. If you never raised $100,000 is unlikely you will receive a gift this size, even if you included it in your strategic plan. Your fundraising and income plan are rational when you can identify short sequential steps that get you from here to there.

Key 2: Effort. The strategic plan states that the fundraising committee will raise funds. The committee meets regularly, directs several initiatives and makes appointments to ask donors for donations and to build relationships. In this case, effort matches the sought outcomes. Contrast this with a fundraising committee who meets for several times and then quits because they have no idea how to fulfill the goals given to them.

Key 3: Proven Paths. Not only must you put forth effort, it must be the right effort. Susan, in the midst of her first capital campaign, attends a workshop to confirm that her work as campaign coordinator is on track and that she has correctly organized her next steps. From her research, Susan learns that she has a proven plan to meet her goal.

Passions often rule, even in fundraising and income development work, unless efforts are made to be rational. What keys that show you are being rational would you add to these three? How do you make sure your fundraising and income development work is rational?

Ruined by Success? The Danger of Windfalls

The Young Parent’s Group won a grant of $50,000 to launch their program. It was a great step forward and, at the same time, almost did them in.

Senior Services received a bequest, from an elderly woman no one knew, for $250,000. It nearly ruined them.

Almost every nonprofit over time will receive one or more windfalls. At successful nonprofits, these windfalls create great celebrations. But after celebrating and investing the funds to better their mission and often to buy that new roof that caused so much anxiety, successful nonprofits return to their tried–and-true fundraising and income development plan.

For others, the windfall creates challenges. Like their successful counterparts they celebrate and often make similar mission investments. However, instead of returning to consistent fundraising and income development work, they fixate on obtaining more windfalls. At Senior Services, five hundred people visit them a year. How can they find the next person who will leave a bequest—when the last bequest was from a one-time visitor? The Young Parent’s grant came from the community foundation as it was launching a new initiative in the area. Which, they wonder, of the other 100,000 or so other grant sources available will give them $50,000 to operate next year?

How can you avoid a windfall from placing your nonprofit at-risk? First, be joyous and grateful. After the celebrations, return to a realistic income and fundraising plan that is based on consistent disciplined-work, proven outcomes and fit with your organization’s temperament. Follow the paths that successful nonprofits like you follow. When your nonprofit has lucky breaks—and you will, recognize them for what they are. Celebrate. Then, return to the tried-and- true.

How does your nonprofit handle windfalls? Have you developed a board policy about how to handle them? Has your nonprofit ever been “hurt” by success?

An Open Question to Board Chairs: Do You Dare to Lead?

Executive directors have thrown down the gauntlet. In “Daring to Lead 2011: A National Study of Nonprofit Executive Leadership” conducted by CompassPoint and the Meyer Foundation, only 20 percent of those surveyed reported being satisfied with their board’s performance. While a few of these executive directors might have a personality conflict with their current chair or have felt particularly frustrated with their board the day they responded, there must be something more significant going on to account for 80 percent of chief administrators indicating dissatisfaction with their boards.

Determining the underlying factor(s) is particularly important in today’s rapidly changing environment where boards must be strong, strategic and steadfast so that their organizations can be responsive and achieve relevant results. Research by the likes of Herman, Renz and Heimovics, Nobbie and Brudney and others have made very clear that there is a relationship between the effectiveness of a board and the effectiveness of the organization for which the board works. While none could prove causality, each found that highly effective organizations have highly effective boards.

I don’t believe that an organization’s effectiveness can be laid at the feet of just one person. Yet, I do believe that you, as board chair, have opportunity and influence that can be brought to bear in ways that you perhaps have not tested. Be honest with yourself. What more could you do to ensure a stronger board, and ultimately a stronger organization?

For instance, research again tells us that highly effective boards use more proven practices than less effective boards. There are a lot of accepted practices out there that are actually based on myth. Are you just propagating these or are you analyzing their effectiveness? Are you making the effort to regularly read or participate in workshops and webinars to learn about governance practices rooted in science? Are you implementing what you’ve learned? If not, why not?

As an unknown sage once said, “Hope is not a method.” You cannot afford to merely come in once a month to chair a meeting, check in occasionally with your executive director and write your column for the newsletter and expect an exceptional board to emerge. Nor can you rely on years of experience with a multitude of boards. The world has changed too much. If you dare to lead, tell us what you are doing differently and what impact it has made.

Better than Genetics: Family Philanthropy Traditions

Seventy percent of high wealth families have traditions that teach family values about the importance of philanthropy to their offspring. This fact presents nonprofits a wonderful set of opportunities. How so? As part of your strategy to create long-term donors, you can offer intentional programming to support this effort. This programming will offer high wealth families, who want to act on this tradition, an opportunity to create a deeper relationship with your organization.

Roxy Jerde, the Executive Director of the Community Foundation of Sarasota recently shared this piece of data at the Funder’s Forum. As an example, she also shared that she brought children from her family to a Ronald McDonald house to meet the residents.

Being open to young visitors, like the Ronald McDonald house, in one example of a way to support this tradition. How else might you support it? If your efforts are minimal but you would like to expand them, check out The Volunteer Family a nonprofit that supports family volunteering for ideas. If you want to be even more proactive offer specific events for young relatives. Some groups offer a volunteer or educational activity for families during school breaks and the summer. Others provide family tours on school holidays. Others offer opportunities one Saturday per month.

If part of your strategy to increase your nonprofit income is to reach new donors, consider helping families to continue or start this tradition in ways that feature your nonprofit. Choose your favorite idea, adapt it to create a signature family event and then share it here to inspire others. Or, if you already have one please share what have you already found to be successful.

Succession Planning: Is Your Board Prepared for Transition?

Everyone is talking about succession planning today. Much of the conversation is motivated by the large numbers of baby boomer executives expected to retire in the next few years. While this is a real concern deserving of our strategic attention, I have to wonder why so little attention is paid to succession on our boards of directors. After all, turnover is virtually an everyday occurrence on boards. Term limits and life’s challenges move people out of office or off the board altogether on a regular basis; and fewer and fewer individuals are stepping up and into the vacated leadership positions. The result is that boards are often forced to choose creative approaches to filling the empty chairs, such as allowing people to share the leadership responsibilities or conferring key positions on inexperienced talent. Unfortunately, experience tells us that such solutions typically result in a loss of organizational momentum or effectiveness. But, this needn’t be the case if we will commit to adequately preparing our boards for transition.

I doubt there is anything we can do to bring back the days where people will spend a decade or more working their way up to a coveted leadership position. But a strong succession plan is within reach of every organization. To see how, we must first consider what a succession plan really is, and what it isn’t. It isn’t about knowing who the next three board chairs will be. It is ensuring that you have a strong board with clear procedures in place, where everyone understands the big picture, is engaged and knows his or her role. In other words, the best succession plan is having a board that regularly operates under proven practices because a board like that will be able to continue to perform effectively regardless of what position may turn up empty tomorrow or the next day.

To determine if your board is prepared for the inevitable expected – to say nothing of sudden – transitions, answer the questions below.
 Does your board have criteria for membership?
 Does your board maintain a current pool of good prospects for board membership by continuously identifying and cultivating potential members?
 Does your board “test out” potential board members by encouraging committee or other participation first?
 Does each individual on your board have a job description?
 Does your board chair have a job description?
 Has each individual on your board gone through an orientation?
 Does your board share a collective vision for the community?
 Does your board share a passion for the mission of the organization?
 Does each individual on your board have ready access to a copy of the bylaws?
 Do the bylaws indicate how the transfer of power will operate under both normal and extenuating circumstances?
 Does your organization operate according to its bylaws?
 Are the expectations of your board members clear?
 Are board members that fail to live up to their expectations asked off the board? (Is this a given, regardless of the person’s affluence or influence?)
 Are your board members provided board education at every meeting?
 Does each individual on your board understand the issues critical to the organization’s mission?
 Do your board agendas encourage participation around substantive issues?
 Are decisions consistently made on the basis of your organization’s mission, vision, guiding principles as well as defined criteria for success?
 Is every individual on your board offered opportunities for leadership?
 Do your board members know each other well enough to look forward to working with one another?
 Does your board take time at most meetings to evaluate what it is doing well and what it could do better?
 Does your board do an annual self-evaluation?
 Does your board make changes in its behavior on the basis of its evaluations?
 Does each committee have a purpose?
 Does each committee have goals?
 Are your committees held accountable for achieving their goals?
 Does your board have a crisis management plan in place?

If you answered “no” or “only sometimes” to most of these questions, you may be left wondering if there is a future for your organization when one or more of your key leaders leave. Don’t let that happen. Make a commitment today to begin working on those conditions to which you were not able to answer a resounding “yes” and soon you’ll realize that succession is no longer an issue because your board is functioning efficiently and effectively no matter who is in the driver’s seat.

The Cause and Corporate Funding

The most misunderstood nonprofit income source is corporate funding. Why? Many nonprofit leaders only vaguely understand the reasons why businesses provide nonprofits money. Yet, most nonprofit leaders would like this income. To obtain it, one must understand the reasons why such partnerships form. Last month’s Added Value article listed five reasons:

· Business Opportunities. Businesses seek to increase their customer base and goodwill among current customers. Nonprofits that reach their customers or potential customers provide an opportunity.

· Employee Support. By maintaining loyal employees, businesses reduce recruitment expenses and improve employee morale. Supporting nonprofits demonstrates that the company has a heart.

· Repayment. The funds represent a concrete expression of business’ gratitude for the community support that made success possible.

· The Cause. A business leader has a passion for your mission. Business income provides him or her with a vehicle to act on their passion.

· Strategic. The business recognizes that working with a nonprofit is a chance to meet these or similar objectives with one check.

Are there additional reasons you would add to this list? Has your nonprofit been funded by a business for a different reason? Are you a business that funds a nonprofit? If so, why?

Read the article, How to Succeed In Business, What Your Leaders Need to Know About Corporate Funding here.