Posts Tagged ‘Nonprofit Sustainability’

Four ways to remove a board member

Occasionally, a board member needs to be removed from the board. In some cases, a conflict of interest or unethical behavior may be grounds to remove an individual from the board. In other cases, the behavior of a board member may become so obstructive that the board is prevented from functioning effectively.

The best boards often have strongly felt disagreements and heated arguments. Challenging groupthink and arguing for an unpopular viewpoint are not grounds for getting rid of a board member. But if a board member consistently disrupts meetings or is otherwise destructive and demoralizing, it may be appropriate to consider removing the individual from the board:

 

Personal intervention

 

One-to-one intervention by the board president or other board leadership is a less formal solution to managing problem board members. If a board member has failed to attend several meetings in a row, or has become an impediment to the board’s work, the board president can meet informally with the board member in question. The conversation can occur in person or on the telephone; the board president can specifically request a resignation. Examples:


“I respect your strong opinion that we have made the wrong decision about moving the office. But we can’t continue debating the issue. If you don’t feel you can wholeheartedly help us try to make the decision a success, I’d like you to consider leaving the board.”

“I suspect this is a time when it’s just not possible for you to get to the meetings and participate as fully as I’m sure you woud like. I’m wondering if it would be better if we released you from your board obligations . . . what would you think about my sending you an email confirming your resignation due to lack of time?”

“I’m having a hard time managing board meetings with your frequent interruptions and I am worried about losing board members due to the kinds of criticisms you make of them in meetings. I think it would be best if you would take a break from the board . . . you could resign now, and later, when there’s a different board president, talk with him or her about your re-joining the board.”

Leave of absence

 

Make it possible for individuals to take a leave of absence from the board if they have health, work, or other reasons why they cannot participate fully during the current term. A board member can take, for instance, a 6-month “disability leave,” or a 3-month “busy with new job” leave.

You can either keep the person on the board formally (but not expect them at meetings) or you can have them resign for purposes of determining a quorum. Either way the time on leave counts towards their board term; otherwise someone who takes a year’s leave can end up being on the board for much longer than is appropriate.

Suggesting a leave of absence to a board member who is, for example, failing to do tasks he or she agreed to do, offers a gracious exit and allows the board to assign tasks elsewhere.

 

Term limits

 

Most boards (62%) establish not only board terms but also term limits, such as two-year terms with a limit of three consecutive terms. In such a situation, a board member cannot serve more than six consecutive years without a “break” from the board. After a year off the board, an individual can once again be elected to the board. Proponents feel that term limits provide a non-confrontational way to ease ineffective board members off the board. Opponents of term limits believe that, with proper board leadership, errant board members can be guided toward either improving their behavior or quietly resigning from the board. (The difficult part is ensuring “proper board leadership” over many years.) Whether or not you have term limits, place a person’s term right next to their name on the board roster; otherwise it’s too easy for everyone to forget how long they’ve been on the board or when their term ends. Example: Jack Moon (Term 2 ends January 2012)


Impeachment

 

Your organizational by-laws should describe a process by which a board member can be removed by vote, if necessary. For example, in some organizations a board member can be removed by a two-thirds vote of the board at a regularly scheduled board meeting.

If you do not have a way to vote out board members, add this now to the bylaws, not when there’s “a problem with a first and last name.”

See also in Blue Avocado:


 

See also:

 

Nonprofit Sustainability: Making Strategic Decisions for Financial Viability

 

This article is adapted from one in the Best of the Board Cafe, Second Edition, by Jan Masaoka.

 

Image credits: wikihow, managementtrends, info.legalzoom

 

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Learn from the downfall and turnaround of a large nonprofit

There was a really interesting article in the Chronicle of Philanthropy recently about a Los Angeles nonprofit for aging Hollywood actors that was in danger of closing its doors but is now raising hundreds of millions of dollars. It’s a rags-to-riches story that demonstrates how nonprofit leaders who embrace change when change is necessary can completely transform an organization.

Arguably, the Motion Picture & Television Fund (MPTF) is not your average nonprofit organization. Set up in the 1920s by Charlie Chaplin, Douglas Fairbanks Sr., and Mary Pickford, it asked actors to donate spare change to help fellow actors down on their luck. MPTF later expanded to become a $100 million organization that serves 150,000 needy actors with healthcare, housing and retirement services. And although MPTF enjoys a budget with a few more zeros than the average nonprofit, its approach to change can serve as a model for other nonprofits.

In the early 2000s MPTF lost its way. Financial hardship forced the organization to consider closing one of its retirement centers, which drew the ire of celebrities like George Clooney. But unlike other nonprofits that lose their way and have to eventually close, Hull House being the most recent and troubling example, MPTF turned things around.

Here’s what the MPTF story teaches nonprofits about embracing the challenge of change:

  • Remove what stands in your way

In order to survive, it’s critical that nonprofits do something not easy for the sector: recognize and address the obstacle. Whether it’s an unmovable executive director, a deficient board, a broken financial model, or a distracting funder, a nonprofit must face the challenge head-on. MPTF realized it needed new leadership and replaced the fund’s president in 2010. Hull House’s board, however, refused to address changing the organization’s financial model despite seeing glaring financial issues for several years.

  • Force honest conversations

When George Clooney voiced his dismay at MPTF’s decisions, new MPTF president Bob Beitcher approached Clooney and listened to his concerns. Beitcher explained they were facing closure of the center because of financial dire straits. Over time he turned Clooney’s concerns into a passion for the organization and eventually convinced him to co-chair MPTF’s capital campaign. Hull House board and staff, on the other hand, kept conversation light. The staff sugarcoated financial reports and the board failed to ask hard questions. It is essential that nonprofits tackle difficult conversations in order to emerge stronger.

  • Create a financial runway

MPTF had a practice of keeping several months of operating reserves on hand. Hull House, by contrast, lived on the edge — to the point of holding negative $2.3 million in net assets in June of 2007, long before the recession really hit. So when it did, it was in big trouble. Nonprofits (and funders!) must get over the taboo against operating reserves. You simply cannot survive, let alone create social change, if you don’t have the financial runway to do so.

  • Connect mission to money

MPTF now enjoys a large donor base, but that wasn’t always the case. In order to get there, it articulated to specific potential donors why its work was so critical and why the donors should get involved. It is currently raising millions of dollars because it has connected the dots for a specific target audience between its need for investment and the impact it is creating. Nonprofits need to articulate what they are trying to change and then find donors for whom that change is attractive.

The closure of such a stalwart and venerated nonprofit institution like Hull House should have been a wake-up call for the nonprofit sector. If it could happen to Hull House, it could happen to any organization. But it doesn’t have to. Instead of blaming the recession, the board, fundraising, or anything else, nonprofits need to embrace the challenge of change.

See also:
Page to Practice book summaries on change: Influencer: The Power to Change Anything

The Six Secrets of Change: What the Best Leaders Do to Help Their Organizations Survive and Thrive

Switch: How to Change Things When Change is Hard

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Strategy is a 24/7 endeavor

As nonprofits began adopting successful practices from the business community, they grabbed hold of one with an iron grip:  strategic planning.  However, in our efforts to embrace the practice, we confused the process of planning with the real work of setting and implementing a strategy.  The planning process became the proverbial junk drawer.  We tossed the odds and ends into the drawer with the expectation that a single process could address them all – the disconnected board that wouldn’t raise money, the staff in need of team building and the need for relevance in a changing market.

The hidden cost?  We’ve become accustomed to thinking strategically only on an episodic basis – when it’s time for the annual board retreat or when our strategic plan has “come due.” It was simply too time consuming to update the plan document.  So we let it gather dust on the shelf or sit idly in the drawer as we went about the real work of running our nonprofits every day. It’s time to take that dusty or irrelevant plan off the self – and throw it away.

We’ve muddled the essence of strategy with the process of plan development.  They are not the same.  To make matters worse, we’ve allowed multi-faceted organizational issues to distract our strategic focus.  The result?  A drawn-out process that causes us to live in suspended reality.  When the process is over, we find ourselves digging deep for the energy to implement.

We could get by with that “process in lieu of strategy” approach when the external environment was more settled.  Gosh, looking back the 1990s and early 2000s seem almost idyllically stable, don’t they?

You simply cannot afford to confuse planning with strategy in today’s dynamically complex world. It’s time to create the game plan – the play book – the “use it every day ‘til it’s dog-eared” handbook.  The strategic direction that truly guides your monthly and quarterly endeavors – the one you “truth test” against.  The resource so valuable that you’ve uploaded it to your tablet and smart phone.

We’re talking about an organizational strategy.  Not tactics.  Strategy can be defined as a coordinated series of actions.  The operative words are coordinated and series.

Now is the time to adapt.  Today’s nonprofit leaders need to find the true connections between the external environment and your organization’s real competencies and vulnerabilities.  As you craft your strategy real-time you’ll need to consider your organization’s unique position in the marketplace.

One of the best resources we’ve found in the strategy setting arena is the article “Can You Say What Your Strategy Is?” by David J. Collis and Michael G. Rukstad from the Harvard Business Review (April 2008).  This seminal piece presents three key concepts:

A hierarchy of statements that illustrates the relationship between mission, vision, values and strategy.  Board members will thank you as you give them something easy to understand.  Strategy wonks will love it as a tool.

A visual of the strategic sweet spot – the market and customers your organization serves best in consideration of what others provide.

A strategy statement that clearly and succinctly describes who you will serve, how you will serve them, and the comparative advantage you will embrace.

The exercise of writing a strategy statement – and we at Corona Insights have written numerous with our clients – is harder than you’d think.  Organizations tend to think they have clarity only to find a lack of agreement and buy-in. The problem?  Our strategy isn’t precise and simple enough to remember.  Imagine if the folks at Apple designed your strategy.  Ah yes.  A strategy statement so clear and concise that you’ve memorized it – and so has your team.

You’ll find the hierarchy of statements is really helpful when articulating your strategy as you ask yourselves, “Is our strategy distinct from our mission?  Might we have confused our vision with our strategy?”

Now that you’ve defined and committed your strategy to memory, it’s time to use it – 24 hours a day, 7 days a week, all year long.  This means you’ll be testing against it and adapting it as required.  Imagine an executive staff or board discussion that goes like this.

We said we were going to pursue ____ strategy.

Does Opportunity A really fit our strategy?  Does it augment or strengthen our business model?  If it doesn’t we shouldn’t pursue it.  If it does – or could with a tweak – then we should.

Are we forecasting changes in the external environment that portend vulnerabilities to our business model?  Revenue sources that were certain two years ago aren’t even likely today.  Eek they’re risky.

Have conditions changed substantially enough to warrant a reality check of our strategy?

As you anticipate the New Year, I encourage you to make the following resolutions.

We’re going to have a strategy – and it’s going to be clear enough that I can articulate it regularly and ensure my team (board and staff) get it too.

I’m going to use a strategy play book – and I’m going to update it as needed to take advantage of opportunities and address threats real-time.  Our whole team is going to be operating from the same play book.

I’m going to anticipate a continually high level of uncertainty in the external environment and will act accordingly – that means we’ll reality-check our strategy on a regular basis.

Best of all, your board will l-o-v-e you when you tell them they don’t need to participate in another day-long retreat or months-long process that leaves them thinking “what’s this all about anyway?”  Like you, they’ll see that strategy is a 24/7 endeavor.

See also:

Nonprofit Sustainability

The Nonprofit Business Plan

The Nonprofit Strategy Revolution

Image credit: worldsoccertalk.com

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Financial endurance: Does your funding strategy have it?

In Kimberley Sherwood’s blog last week at Co-Strategy, she talked about the importance of defining your funding strategy and went on to cite research by Bridgespan (featured at NPQ), which highlighted a handful of best practices for guiding your strategic financial growth.

One of the practices from Bridgespan surrounds the notion that “you must break the funding wall by committing to an evolving funding strategy over time. As you consider the next three to five years, how will your strategy need to evolve to ensure your long-term financial security to deliver sustained impact? Where do you take calculated risks?”

In Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, authors Jeanne Bell, Jan Masaoka and Steve Zimmerman underscore Bridgespan’s research, encouraging nonprofit leaders to ensure financial endurance and sustained impact through an evolving revenue strategy. In my interview with the authors, I asked them about their view of sustainability as an orientation, not a destination. Steve’s response is fitting for this discussion:

One of the common comments that I receive from boards when we’re doing strategic planning is that they want a ‘sustainable business model.’ It is often said in a way that implies that sustainability is a destination-–once you get to the nirvana of a sustainable business model you don’t have to worry anymore and money will continue to come rolling in for perpetuity. We know the reality is that nothing is forever. Funding sources come and go and constituents’ needs evolve. So, what is sustainable today may not be sustainable tomorrow. As a result, sustainability is constantly evolving and requires an orientation of monitoring and decision making to make sure that your organization is sustainable at any given point and time.

Smart nonprofits today realize the board can’t bring in a consultant and have a “one-off” strategic planning session. They must commit to an evolving plan that’s responsive to the ever-changing environment. How relevant is your current plan and does it build your financial endurance?

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Model statement versus mission statement: Do you have both?

When engaged in decision making, nonprofit leaders typically look at financial sustainability and programmatic sustainability in isolation from one another. Because a blended approach is seldom used by boards and leaders, important decisions are made out of context, leaving the organization at greater risk for future viability.

In Nonprofit Sustainability, the authors demonstrate how to use an adaptable tool called the “Matrix Map,” which is extremely helpful in visualizing what programs merit nurturing, require dissolving or compel us to maximize them based on their profitability and impact. Matrix mapping can be used for simple decisions, complex collaborations, mergers, planning and fundraising feasibility. The authors claim that Matrix Maps foster discussion, facilitate strategic options and ensure that decision makers keep both aspects of sustainability front and center.

Nonprofit Sustainability uses three fictitious organizations to illustrate how to use the Matrix Mapping tool and introduce the concepts of business models, sustainability and financial viability in the nonprofit setting. According to the authors, financial sustainability is not only a legitimate goal, it is a necessary and intrinsic goal. Furthermore, most nonprofits are now employing hybrid revenue strategies where they combine donations, earned income, contracts, grants and other income types. Consequently, financial goals must be set and managed differently for each revenue stream.

Whether it is purposeful or not, every nonprofit has a business model, say the authors. Even though every program is managed individually, each must operate within an overall strategy. The authors assert that leadership’s role is to develop and communicate that strategy so all the activities operate within one vision, which makes the business model viable.

CausePlanet: One of the most intriguing imperatives I read in this book was the importance behind describing what success will look like. So I asked Bell, Masaoka and Zimmerman “What is the best use of a business model statement as it relates to the mission statement?”

Zimmerman: “Mission statements discuss what the organization wants to accomplish typically in broad, inspirational terms. Business model statements are more specific and provide details not only on how the organization carries out its mission but also how it pays for it. So, for example, an early childhood education center’s mission statement might be:

“To support the intellectual, physical, spiritual and emotional development of children so they become self sufficient, contributing members of the community,”

but their business model statement might read:

“We provide early childhood education and daycare services for children ages three to five supported by government funding and subsidized through the generosity of individuals.”

The statement acts as a guide for the board in explaining the business model and helps focus them on the programs and revenue strategies that create a successful organization.

For more discussion about Nonprofit Sustainability, you can follow the authors: Jan Masaoka at Blue Avocado (www.blueavocado.org), which is an online magazine for nonprofits where the discussion on this topic and many others is continuing. Both Jeanne Bell and Steve Zimmerman contribute there and can also be reached via their respective organizations: Compasspoint (www.compasspoint.org) and Spectrum Nonprofit Services (www.spectrumnonprofit.com).

 

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Learn how to revise your business model with Matrix Maps

Free Nonprofit Sustainability webinar

Based on the book Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, co-authors Jan Masaoka and Steve Zimmerman will present a webinar on the Matrix Map tool for understanding and revising your business model to address both financial and mission impact at the same time.

If you attend the webinar, you will also receive a coupon for a 25% discount on the book. Thursday, June 16, 11:00 am Pacific time. Click here to register for free. Limited to the first 500 registrants.

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Destination: Sustainability

For nonprofit leaders who are tired of their current decision making paradigm, the more nimble and actionable process of “matrix mapping” explained in the book, Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, offers a fresh and immediately gratifying alternative.

This book will help you examine your current business model, identify areas for adjustments, consider income streams and ultimately assist with ongoing decision making. Nonprofit Sustainability by Jeanne Bell, Jan Masaoka and Steve Zimmerman is an essential tool for CEOs, EDs and management teams.

There was a quote from this book that especially resonated with me because I’ve heard versions of this so frequently during my years in the nonprofit sector. It goes as follows: “A new executive director was told by the board and the staff, ‘There’s a $300,000 hole in the budget that you have to fill.’ Not only is this a dishearteningly phrased directive, it’s an unproductive way to characterize a financially difficult situation. Behind this statement is the unspoken assumption that programs and their funding occupy two separate spheres rather than fitting into an overall business model for the organization.” (p. 109)

This excerpt compelled me to ask the authors, “What is the most common reason why nonprofit leaders look at programmatic sustainability and financial sustainability in isolation of one another?”

Steve Zimmerman responded by saying “It is difficult for board members and senior managers to look at both mission impact and financial profitability primarily because our systems aren’t designed to do so. Program evaluations rarely provide information about the full cost of the program and financial statements don’t reveal the impact that our programs are having. Likewise, in our board meetings we tend to discuss items down an agenda: programs then finances then fundraising. But all of these are deeply interconnected. The Matrix Map is a visual tool that integrates mission and money and allows leaders to make decisions while holding both programmatic and financial sustainability together.”

I also asked Zimmerman, Bell and Masaoka to explain their claim that “sustainability is an orientation, not a destination.” Zimmerman said, “One of the common comments that I receive from boards when we’re doing strategic planning is that they want a “sustainable business model.” It is often said in a way that implies that sustainability is a destination – once you get to the nirvana of a sustainable business model you don’t have to worry anymore and money will continue to come rolling in for perpetuity. We know the reality is that nothing is forever. Funding sources come and go and constituents’ needs evolve. So, what is sustainable today may not be sustainable tomorrow. As a result, sustainability is constantly evolving and requires an orientation of monitoring and decision making to make sure that your organization is sustainable at any given point and time.”

For more discussion about Nonprofit Sustainability, you can follow the authors: Jan Masaoka at Blue Avocado (www.blueavocado.org), which is an online magazine for nonprofits where the discussion on this topic and many others is continuing. Both Jeanne Bell and Steve Zimmerman contribute there and can also be reached via their respective organizations: Compasspoint (www.compasspoint.org) and Spectrum Nonprofit Services (www.spectrumnonprofit.com).

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