Archive for February, 2013

Minimize your “big idea” risks by asking 4 questions

Have you ever loved a new idea so much you’re willing to forgive the nagging uncertainty of its financial viability? I’ve been there. You’ve already created the catchy name, bought the URL and outlined the program details. To ease your conscience, you tell yourself you’ll just work harder at selling it.

The authors of Blue Ocean Strategy would say a great idea isn’t enough. They’d put you through what they call a strategic sequence of questions.

Blue Ocean Strategy (BOS) emphasizes a focus on blue oceans of uncontested market space. In contrast, red oceans or existing market space get crowded as more compete for a greater share of existing demand. Cutthroat competition turns the ocean red. Blue oceans consist of untapped market space where there is opportunity for highly profitable growth and where competition is rendered irrelevant. As nonprofits more frequently turn to alternative funding sources, they don’t have the luxury of crashing and burning on a bad idea. That’s why the BOS methodology is essential for nonprofits during any form of planning/forecasting.

An integral part of BOS approach is creating a business model that is viable and makes a healthy profit in the blue ocean. If you follow the correct strategic sequence and test your blue ocean ideas against criteria in that sequence, you can minimize your risk. The sequence stems from the authors asking the following questions.

If you answer “no” to any question, your blue ocean potential stops.

Buyer utility—Is there exceptional buyer utility in your business idea?
Price—Is your price easily accessible to the mass of buyers?
Cost—Can you attain your cost target to profit at your strategic price?
Adoption—What are the adoption hurdles in actualizing your business idea? Are you addressing them up front?

We asked our interview guest, Heather Gowdy, and coauthor of The Nonprofit Business Plan: A Leader’s Guide to Creating a Successful Business Model (2012), to discuss the merits of the strategic sequence in light of her unique perspective on business planning.

CausePlanet: The strategic sequence (on page six of the Page to Practice™ summary) reinforces a closer look at the financial aspects of a potential blue ocean. We know from The Nonprofit Business Plan, you would endorse thoroughly understanding the financial aspects of any potential strategy. Will you comment on the importance of questions like these in the strategic sequence?

Gowdy: It is absolutely critical to understand the financial implications of a potential strategy—just as it is important to understand the implications for mission advancement. Many nonprofits excel at doing both, but just as many struggle with aspects of business model analysis. Which is understandable: doing so can be even more complex in the nonprofit sector than in the business sector. A nonprofit organization’s “buyers” or customers are not just the individuals and groups availing themselves of a particular product or service. Given that those customers typically do not pay market rate for what they receive, the nonprofit must make up the difference with funding from other sources. Those third-party payers are also customers (buyers) although they may not receive anything directly in return. Nonprofits must continually consider, attract and satisfy both types of customer. The price versus cost question can be equally challenging. Nonprofits can, do and often must provide services that do not in and of themselves generate a financial profit. The question becomes, does the mission value of doing so warrant moving forward, and if so, what other aspect of the business model will support that? Jumping to implementation without having clear answers to these questions is risky at best.

When you’ve considered launching a new idea, have you asked yourself questions similar to these contained in the authors’ strategic sequence? If you answered “no” to any of the questions, did you still carry on with the plan or make adjustments?

See also:

Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant

The Nonprofit Business Plan: The Leader’s Guide to Creating a Successful Business Model

Which comes first: the partnership or the plan?” by Heather Gowdy

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Take your organization to the next level: prevent silos through integration

Delegation is necessary, but…

Nonprofit organizations, like any group working together for a common purpose, carve out certain activities in order to delegate them. For example, the board works on strategic planning, the development staff works on grant writing, the accountant sets up and monitors the financials and so on. This makes good sense–certainly everyone can’t (and shouldn’t) be involved with everything. That’s obvious.

What isn’t always as obvious, though, is when and how these activities should be brought back together.


In consulting with a wide range of nonprofits, I’ve found it’s often my client’s ability to see the connections between activities such as strategic planning, board development and grant writing that really gain the client a quantum leap in his/her thinking and approaches. So, while delineation and delegation of work activity is key to getting things done, if the results of those activities are not reconnected for the benefit of the whole, the organization suffers.

Example of siloing

For example, in many organizations, development people write grants for funding from major foundations. Since foundations ask crucial management questions, effective grant proposals express the nonprofit’s strategic approach to its mission and to the particular funding request. But even so, few if any board members–or in many cases, even executive directors–ever read the proposals. Nor in many cases did the grant writers have access to the organization’s strategic plan as the foundation for writing the proposals. This disconnect between two primary activities in the organization means a weaker, less effective grant proposal and a weaker, less-informed board.

And this is just one example of how the siloing of basic activities in a nonprofit can hinder its overall success.

How do you prevent silos?

What can be done about this? The most effective leaders think through what types of reintegration make the most sense and then develop the mechanisms in their organizations through which they will occur. For example, good budget development requires the information provided by past years’ financial statements and input from the key staff responsible for earned and contributed income. The leadership should develop policies and procedures to ensure cross-pollination between responsible board and staff members takes place in budget development as a matter of routine, rather than expecting (or assuming) it to happen as the result of the initiative of those involved.

In another example, fundraising and marketing campaigns should originate with the strategic plan, but too often these efforts are developed in isolation. This could be the result of the organization not having a strategic plan (or it being out-of-date) or it could be that the leadership has not made it clear these efforts must synchronize with each other. To address this, the leadership could pass a policy that all development and marketing materials must reflect the priorities and language of the organization’s strategic plan and then create procedures whereby the board  collectively reviews marketing and fundraising materials, e.g., the basic grant proposal template, on an annual basis. Not only would this ensure there is a strategic plan, the development staff has access to it, and the intersection of these efforts actually takes place, but also board members are up-to-date on what is being communicated about the organization.

This may seem obvious, but it’s surprising how often nonprofits struggle to delegate activities effectively and once this is accomplished, consider that the end of the matter. Or they chalk it up to a communication issue and assume the responsible individuals will take care of it. In fact, it is in the bringing of these delegated activities back together by the leadership that the real benefits are realized. This is because, simply, everything is connected to and impacts everything else in an organization. A culture that values and nurtures this synergy is what makes for a balanced,resilient, innovative organization–instead of a siloed, reactionary and defensive one.

Integration means going from “good to great”

The more the leadership of a nonprofit is fluent with the intersection between areas of major activity, the better able it will be to lead. This agility and breadth of understanding across the organization enables an organization to go from “good to great,” to use Jim Collins’ phrase. While specialized expertise in areas like development, planning, marketing, technology and finance is critical in today’s world, it is the leadership’s ability to integrate them-to see what is greater than the sum of their parts-that gets big results.

Nonprofit-KnowHow: The Guide and The Workbook supports nonprofit leaders in reintegrating often siloed activities such as strategic planning, fundraising, board development, finance and more, for greater resilience and impact.

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Strategic plan has you seeing red? Try blue.

When most of us think about how to get an edge, we look around at our competition. We strategize about how to outperform our peers and raise more funds from the same donor pool.

Blue Ocean Strategy authors, Chan Kim and Renée Mauborgne would argue that approach is exactly why you’ll fail.

Instead, they ask you to imagine a market universe composed of two sorts of oceans: red oceans and blue oceans. Red represents all the industries in existence today or our current market space. Blue oceans denote all the industries not in existence.

The red ocean or existing market space gets crowded as more compete for a greater share of existing demand. Cutthroat competition turns the ocean red. Blue oceans, in contrast, consist of untapped market space where there is opportunity for sustainable growth and where competition becomes irrelevant.

Ringling versus Cirque:

The premise of Blue Ocean Strategy is aptly described by the authors through the exploration of Cirque du Soleil, one of Canada’s largest cultural exports. In less than 20 years, Cirque has achieved revenues that took Ringling Bros. and Barnum & Bailey—the global champions of the circus industry—more than 100 years to attain. What makes its success remarkable is its achievement in a declining industry. Cirque has succeeded by creating a new, uncontested market space that has made the competition and declining circus market irrelevant. They have appealed to a whole new group of customers: adults and corporate clients rather than children.

While you may feel like you run a three-ring circus that happens to have a 501c3 status, you’re not alone. Kim and Mauborgne encourage you to quit competing with so many peers, and instead, create your own uncontested market space.

A nonprofit planning perspective of Blue Ocean Strategy®

We asked Heather Gowdy, coauthor of The Nonprofit Business Plan: A Leader’s Guide to Creating a Successful Business Model (2012), to discuss the merits of Blue Ocean Strategy with us in light of her unique perspective on business planning.

CausePlanet: Heather, thank you for serving as our guest author for this interview. As a member of the La Piana Consulting team and coauthor of The Nonprofit Business Plan, you bring a unique and welcome nonprofit perspective that’s especially relevant to this business book and to building a successful business model. What do you appreciate most about Kim and Mauborgne’s Blue Ocean Strategy®?

Heather Gowdy: First and foremost, I love the emphasis on stepping back and taking the time to truly think strategically about your market, your customers and your noncustomers. So often organizations get trapped in the same grueling competitive cycles, searching for ways to incrementally adjust what they do to better meet the needs of clients, customers, individual donors or institutional funders. There is real value in thinking “out of the box” and looking for blue ocean strategies that might better enable you to advance your mission–strategies that may not be at all obvious now, but will lead to greater impact and sustainability in the long term.

In what color ocean does your current plan have you swimming? What appeals to you most about the Blue Ocean Strategy®? In my next post, watch for more interview excerpts with Heather and why you should be seeing blue instead of red.

See also:

Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant

The Nonprofit Business Plan: The Leader’s Guide to Creating a Successful Business Model

Which comes first: the partnership or the plan?

Image credit: Cirque du Soleil

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Executive sessions: Five reasons they are bad for your organization

This was originally published on William Mott’s website.

An army of lions commanded by a deer will never be an army of lions. –Napoleon

An executive session example

During a recent conversation with a nonprofit business manager, he shared with me the disturbing and unfortunate news that the board of trustees of the organization had decided to start holding executive sessions. Such sessions are usually held after the conclusion of business from the regular board meeting. Excluded from the session are staff and ex-officio members of the board, including the CEO or the Head of School for an independent school.

This issue of executive sessions is one I raise in my book The Board Game. I am philosophically very opposed to these sessions. During my career I have been a nonprofit CEO as well as a board member for several different organizations. So I recognize the perspective of both. Executive sessions are destructive and will inevitably lead to an atmosphere of distrust. They are a distraction and may lead to the departure of the CEO.

The first question I had for my friend was, why? Why would the board decide to do this? Especially given that the CEO was very effective and the board had never held executive sessions before. He indicated a new board chair had just begun his duties and wanted to include executive sessions. I then asked, was the new chair sharing information discussed during the sessions with the CEO? The answer was no, no information was being shared. I would not wish to be that CEO.

The five reasons

As I reflected on this new situation I thought it would be timely to revisit why executive sessions are not healthy for the organization. Here are the top five reasons why I believe executive sessions are bad:

1. Executive sessions create a climate of mistrust between the CEO and the governing board. One of the most important characteristics that must be present for organizational effectiveness is for the board chair and the CEO to trust one another, to respect the role that each must play. Executive sessions do not produce trust or respect.

2. Executive sessions demonstrate that a true partnership is absent from the relationship. Working together means just that. The CEO and board chair have different responsibilities but they must work together to achieve mission and vision for the organization.

3. Executive sessions may suggest the board has something to hide. If it does not have something to hide, why hold these sessions? What is it the board can’t share with the CEO? Other than issues of compensation, there is no reason to keep anything from the CEO.

4. Executive sessions demonstrate a lack of understanding o fthe board’s role. All too often, executive sessions are forums to spread gossip and discuss staff or other matters in unproductive and inappropriate ways.

5. Executive sessions often include discussions about issues with which the board has limited or no information. Meeting in the absence of the CEO, the board may lack the information needed to effectively discuss the matter.

There will be those who believe differently. They will argue executive sessions are harmless and thinking otherwise is simply being paranoid. Is it possible that something constructive can result from these sessions? Yes, but why exclude the CEO when this individual can add to any conversation the board is having. Nonprofit organizations and their boards should strive for more, to be better than this. They should be seeking to be the best possible.

Leadership is recognized in people of courage–individuals who inspire, motivate and encourage. These are the kind of board members who will not make the mistake of equating executive sessions with doing the real work of the organization. That’s the kind of organization I want to support.

See also:

The Board Game: A Story of Hope and Inspiration for CEOs and Governing Boards

A Fundraising Guide for Nonprofit Board Members

The Ultimate Board Member’s Book

The Nonprofit Leadership Team: Building the Board-Executive Director Partnership

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For whom the bell-shaped curve tolls: why you must target your foundation proposals

During the years I ran charitable foundations, I learned about some of the fundraising ideas that work against success. Here’s one:

No curve with proposals

People looking for funding figure that funding proposals can be graphed in a bell-shaped curve with inadequate ones at one end and terrific ones at the other–the majority lying in the fat middle of the curve. What I learned over the years was that bell-shaped curve thinking undergirds quite a few of the proposals that fail.

Grant seekers think, “I’m tired and I’m in a rush and I hate this. So I’ll assemble a proposal that comes pretty close. Since our work is good, I’ll still have a chance.” The problem is when proposals are evaluated, there’s no nice curve with poor proposals at one end and superlative proposals at the other, with funders carefully examining the bulk of good efforts occupying the middle. Since few funders make their internal processes transparent to grant seekers, it’s understandable that the reality of proposal evaluation is misunderstood.

For many foundations, all the bad and misplaced proposals are rejected fast, usually way before anyone in authority ever sees them. Various funders give this initial screening job to assistants or sometimes to young interns.

The good don’t make the cut

But the good and even the really good proposals in the center of the assumed bell-shaped curve also get rejected frequently or for some funders, almost always. Program officers may or may not spend any time with the good proposals. Even if they are told to look at them, the look may be cursory at best.

What program staff at foundations usually focus on is distinguishing between excellent proposals and really superlative proposals. One foundation I ran had a 95% rejection rate during some busy years. So we only looked at proposals that fit perfectly and were outstanding.

You can see from this description that sending in a decent proposal or even a good one isn’t functionally different from sending in one that’s poorly done. You might say, so what? It’s just the price of paper and postage or filling out a web form, and I’m under pressure to send out lots of proposals.

Lots of proposals squander resources

When you send out scattershot proposals, you are contributing to two problems. One is the squandering of a crucial resource:you, the fundraiser for your organization. Your labor would be more effective if you produced a smaller number of really first-rate and well-targeted funding requests. From your point of view, if you are sending out forty proposals, maybe one will work. But each recipient funder sees only the one proposal you send, and s/he will quickly bounce it. The time, effort and money you spend broadcasting hopeless proposals is costing your organization extra money that you then have to raise.

Second, foundations hire staff to process proposals, track them with computer systems and talk about them on the phone. Funders build expensive processing capability to do this, paid for out of what the IRS calls the minimum payout requirement: funds meant to cover grants and the cost of making grants. As a result, there’s less money available for grant seekers, because the funders are bulging with excess infrastructure they need due to so many misdirected proposals.


I have two suggestions about how to address this problem.


One is to send out a small number of beautifully written, well-researched and very carefully targeted proposals. You can spend the time you might have used compiling huge “hit lists” on research to discover the much smaller number of funders who are likely to consider your request for support. That effort can include many revisions of your standard proposal so you make the most compelling case possible to each individual funder.

I’ll let you in on a funder secret. Most foundations I know receive proposals on occasion that are addressed to another funder. Often it’s a funder whose name or foundation is adjacent in the alphabet. In sending out amass mailing based on a big funder list, the wrong proposal got stuffed into the wrong envelope–or the wrong mail-merge field. It’s an understandable mistake, but often fatal to the proposal. The funder may say, if you couldn’t be bothered modifying your proposal for me, I won’t bother reading it.

Realistic production expectations

The second issue is the pressure to produce. There’s often a tension between two groups in nonprofits: spenders and raisers.

Nonprofit boards and executive directors often can’t run the programs they want because of insufficient funds. Therefore, they push the fundraisers to raise a lot of money fast with little expenditure of overhead.

Experienced grant seekers know good fundraising takes time. They know sometimes you have to start small and then build. They know you have to spend money to raise money.

But the fundraiser is rarely the person with ultimate authority. Even executive directors answer to boards. So the fundraiser has to deal with the expectations of her boss who may say, just send out more proposals. That’s what will bring in more money, like a farmer planting more seeds to get a bigger crop.

Fundraisers do indeed need to raise money or find other work. It’s that simple. But even the most successful fundraisers sometimes feel unfairly burdened with unattainable expectations.

Quantity does not equal quality

All of us have a responsibility to help boards and nonprofit managers understand that in the proposal business, quantity is not the same as quality, and that often sending fewer proposals, not more, will produce the most income over time.

I wish foundations would take more time to show grant seekers how funders work. In the absence of better transparency and accountability, the best we can do is tailor our behavior to what we have learned actually brings income. A few very well-targeted, superlative proposals are the surest route to success.

See also:

Martin Teitel’s book, The Ultimate Insider’s Guide to Winning Foundation Grants.

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So what’s all the fuss about culture?

So what’s all the fuss about culture? Why does promoting a good culture feel like something that can be pushed down on the priority list after board recruitment, fundraising, and filling that vacant position?

Though you can’t see it, and it’s even harder to describe, experts prove again and again how a healthy, toxic, or even ignored culture can make or break every aspect of your efforts—yes, that includes productivity and your bottom line.

Now that I have your attention, turn your focus to our upcoming live author interview with Michael Stallard. He’s coauthored Fired Up or Burned Out: How to Reignite your Team’s Passion, Creativity and Productivity with Carolyn Dewing-Hommes and Jason Pankau. Connected organizations are more productive, more innovative and more profitable; conversely, a lack of connection will gradually burn employees out. Author Michael Lee Stallard makes the case for increasing connection at work and shows you how to build a “connection culture”—a culture that increases connection among people—by increasing the elements of a connected culture: vision, value and voice. Paying attention to these so-called “soft” aspects of the work environment will help increase employee engagement and, in the end, will make your organization more successful.

Stallard recent submitted an article, “Weathering the economic storm: how to boost morale.”

Join us for a conversation with Stallard about three elements of a connection culture: vision, value and voice. Leaders who intentionally foster these three elements will reap the benefits of productivity and innovation. Now who can’t use more productivity and innovation in the workplace?

Watch Stallard explain “Connection Culture.”

See also:

Michael Stallard’s site:

The Nonprofit Organizational Culture Guide: Revealing the Hidden Truths that Impact Performance

The Happiness Advantage: The Seven Principles of Positive Psychology That Fuel Success and Performance at Work

Switch: How to Change Things When Change is Hard

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Why haven’t we tackled the “biggie” of systemic challenges?

We like to think we know change in the nonprofit sector. We’re in the business of systemic change after all. So why haven’t we tackled the “biggie” of systemic challenges? Yes, I’m talking about our challenges as a sector.

In our current Page to Practice™ book feature of Charity Case at CausePlanet, we’ve explored how author Dan Pallotta argues that the social sector is required to work with a different rule book than the corporate world. This alternative rule book prevents us from moving the needle on critical humanitarian issues and reflects five transgressions against the sector. These transgressions range from disparities in compensation, to risk-tolerance for revenue generation, to the time horizon for successful outcomes.

Pallotta further asserts that the social sector needs its own civil rights movement to overcome these hurdles perpetuated by the current rule book and explains his plan for a new “Charity Defense Council” to lead it.

The Council should approach the problem from five angles: 1) Establish an Anti-Defamation League; 2) launch an aggressive, paid public media campaign; 3) enact a National Civil Rights Act for Charity and Social Enterprise; 4) establish a Legal Defense Fund; and 5) organize the sector on behalf of its own issues (including 17 ways to get involved in this movement).

In our interview with Pallotta, we asked him about which of the five strategies he felt was most important and about the role of other sectors:

CausePlanet: You’ve discussed five strategies that will help the social sector change the way our society views charities. In your opinion, which is the most important among them?

Pallotta: We need to begin with anti-defamation and public advertising efforts. Those are the two quickest paths to a public conversation. Charities are defamed in the media all the time, and there is no legitimate nationally respected voice there to defend or offer an alternative point of view. And that’s free media if we can get an anti-defamation voice to respond to those stories. With public advertising, we can completely control the message and deliver lay-friendly, really smart, really provocative ads that can change people’s minds quickly.

CausePlanet: Many thought leaders observe meaningful social change happens when sectors collaborate to create a movement. What essential actions might we need, if any, from the corporate and government sectors to accomplish this new view of charities?

Pallotta: Not to be too pedestrian, but one of the things we could use would be corporate brands sponsoring these efforts with financial support. The government could create a sea change overnight by finding a national iTunes for charity that would give the public much more robust and friendly information that is updated regularly. Eventually it could provide information on every single nonprofit organization in the country.

Do you feel you operate under a separate rule book from the corporate sector? Have you experienced any of the transgressions Pallotta mentions? If yes to either question, tell us about it.

For more information about Dan Pallotta’s Charity Case, or to purchase his book, visit

If you would like to view the full Page to Practice™ book summary of Charity Case to research the book further, visit our Summary Store to purchase a copy or subscribe to our entire Page to Practice™ library of recommended reading. Or, download a free sample of a Page to Practice book summary and see if you like our format.

See also:

Charity Case

One-Hour Activist

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Ten ways boards can damage their organizations

This article was originally published on the Third Sector Innovations website.

1. Members join boards of organizations they don’t really care about. They fail to commit and fail to be engaged. The idea still exists that service on a board of directors is an “honorary” recognition, and it is not–it IS a lot of work and a serious challenge to lead through effective governance.

2. Members think showing up for board meetings fulfills the extent of their obligations, yet membership entails more. The rule of thumb for a well-run organization is a minimum of six hours per month should be spent inboard activity, according to Jeff Pryor, formerly at Anschutz Family Foundation:

  • 2 hours at board meetings
  • 2 hours in committee work
  • 2 hours in outreach (marketing, public relations, fundraising)

In reaching this level of commitment, members need to understand when they’re “wearing their board member hats” and when they’re “wearing theirvolunteer hats.” Additionally, they need to remember that efforts made by committees involve lots of hard work and should not be changed. Boards will often want to change the decisions of committees without full knowledge of committee research and discussion. Let the committees do their jobs!

3. Board members don’t prepare to do the job correctly. There is a general tendency to NOT prepare for board meetings (read materials, etc.)and a lack of understanding of the role of governance, which is to establish the proper controls to allow the organization’s work to be done in a cost-effective, responsible manner. Board members don’t always see “the big picture,” which should be the essence of their role in order to protect and promote the mission of the organization.

4. Board members don’t understand budgets and other financial presentations, leaving it to others to make sure funds are in place and wisely spent. These same members are shocked when the organization is in the red or worse yet, the victim of an ongoing misuse or theft of funds. Boards have a strong fiduciary responsibility within nonprofit organizations, and each member needs to have a clear understanding of how monies are accrued, managed and spent.

5. Members think the bottom line in an organization is its financial status. In any nonprofit organization, there are two bottom lines: the finances and the mission. All programs and initiatives should be weighed in financial terms as well as by how they serve the mission.

6. Board members fail to speak up when every indicator says that s/he should. Members fail to ask questions. Members fail to “rock the boat” as it sinks deep into the ocean. It is the responsibility of each member to ask questions and speak his or her mind, leading to knowledgeable and informed decisions.

7. Board members don’t do their duty to give, get AND get off! This means giving personally (money, expertise, time), getting others to contribute the same, and getting off the board when it’s time. Yes, fundraising and term limits are minimal expectations of the job.

8. Board members hire, retain and tolerate the wrong executive director. They expect too little of this person. They know they’re micromanaging, and it’s because the director isn’t getting the job done. The board needs to set roles that are clearly defined and regularly check in to make sure the board is doing board work and the staff is doing staff work.

9. Board members fail to be involved in long-range planning, sometimes not looking to the future at all. Board meetings are spent talking about past progress and what already has happened. The board needs to take its responsibility of long-range planning very seriously, setting a course for the future, and then spend significant time looking forward at board meetings.

10. Board members engage in parking-lot conversations. It is frustrating for both staff and other board members when conversations occur and “unofficial” decisions are made after or between meetings. Board members’ opinions need to be heard at meetings, not in closed-door or under-the-table discussions.

See also our Page to Practice book summaries related to board development:

A Fundraising Guide for Nonprofit Board Members by Julia Ingraham Walker

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