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Good News Bad News for Boards & EDs

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Listen up, nonprofit leaders! I’ve got good news and bad news.

I’ll start with the bad: according to Harvard Business Review’s April 2013 issue, corporations share many of the same governance issues that nonprofits do.  It’s both disheartening and comforting to know that good Board leadership and governance is hard to create, manage and sustain in any sector.

The good news is that the issue – and specifically the article “What CEO’S Really Think of Their Boards” – offers some sound advice for both Directors and Executive Directors/CEOs.

First, the article suggests that Directors:

  1. Focus more on the risks that are the most crucial to the future of the organization. Don’t shun risk or see it in personal terms.
  2. Do their homework to understand the issue/industry the organization addresses.  And, stay consistently plugged in.
  3. Bring character and credentials, not celebrity, to the table.
  4. Do more to challenge strategy constructively.
  5. Make succession less, not more, disruptive to operations.

 

One of the most powerful revelations presented in the article came from former SEC chairman and Aetna CEO William Donaldson: “The Board is a social entity.  And the human beings on it – they act like human beings do in groups. The longer individuals are there, the more allies they have, the more they have their dislikes, the more irrational they become in terms of personal conflict.”  He’s amazed that more work has not been done to illuminate “the social contract within a board.”

Donaldson’s comments underscore two key similarities – and often functional roadblocks – in corporate and nonprofit Boards: ownership and the importance of relationship.  Directors of public corporations do not own the companies they are directing.  They sit in their Director roles in service to the shareholders of the company.  Nonprofit Board members also do not own the organizations they lead and are in service of their stakeholders (or beneficiaries of the nonprofits programs and services).

Regardless of the sector, Directors must put aside personal agendas when they step into a Board meeting and abide by the social contract they hold with one another and their shareholders/stakeholders.

The article concluded by identifying three key takeaways:

  1. The entire organization will get more value if the partnership between the CEO and Board is strong.  If governance isn’t working, it’s everyone’s job to figure out why and to fix it.
  2. Most boards aren’t working as well as they should.  Although governed by bylaws and legal responsibilities, interactions between CEOs and Directors are still personal, and improving them often requires the sorts of honest, direct and sometimes awkward conversations that serve to ease tensions in any personal relationship.
  3. The best leadership partnerships are forged where there is mutual respect, energetic commitment to the future success of the organization, and strong bonds of trust.  Great boards support smart entrepreneurial risk taking with prudent oversight, wise counsel and encouragement.

I encourage you to share this summary in your next Board meeting packet and set aside some discussion time to explore everyone’s thoughts and reactions to the article’s findings.  Perhaps doing so could present you with a wonderful opportunity to strengthen your partnership and refine your collective focus for the rest of 2013.

If you would like to read the entire article, please feel free to stop by Spokes.  And, as always, if your organization would like a little extra encouragement, coaching or assistance in facilitating these sometimes daunting conversations, Spokes is here to help.  Just call – 805-547-2244!

Communication, Conflict & Collaboration

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Whether it is in the workplace or our personal lives, we’ve all dealt with ineffective communication that has eventually led to conflict. To address these issues, Spokes was pleased to have Steffanie Medina and Kelly Donohue of Creative Mediation instruct one of our most recent workshops: “Communication Conflict and Collaboration”. Some highlights from the class include:

There are five steps in any communication process:

Sender –> Message –> Method –> Receiver –> Feedback   (which goes back to the sender – note: even silence can be considered feedback!)

Although this seems like a simple process, there are many ways in which the communication goes astray – one reason being that the expectations may be mismatched from the beginning. For the message to be clear, both the sender and receiver must clarify and understand what is driving the message. Although an expectation may be communicated, there can many underlying interests and layers within that particular expectation.

Handling Conflict

First off, it is helpful that we recognize our own conflict management style. There are four types of styles: confrontive, persuasive, observant/introspective and avoidant. None of these styles are wrong, but there can be pros and cons to each one. We learned that these styles can be situational based (or change after time). Ex: One may be persuasive during conflict at home, but avoidant in a work-setting. What is your conflict management style? Click here to take the survey!

No matter your style of managing conflict, these tips can be helpful when aiming toward resolution:

-Be honest with yourself, ask the other party open-ended questions to find out their wants/needs

-Pay attention to feelings (as they can be clues to the underlying layers)

-Digging for “truth” or “what’s right” doesn’t produce the best solutions.

During the workshop, attendees exchanged ideas and advice in regard to effective communication and conflict resolution. Catalina Coz, Outreach Coordinator at GRID Alternatives, stated:  “I learned powerful tools to communicate more professionally and productively with peers and supervisors.”

Thank you to Steffanie and Kelly for presenting this valuable material!

Nonprofit Tax Filing Requirements

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Most of you will already be familiar with the time frame for filing your organization’s non-profit returns with the IRS and the Franchise Tax Board.  These forms must be filed no later than the 15th day of the fifth month after the fiscal year end.  For example, if your entity’s fiscal year ends on December 31st, your filing is due on May 15th.  The filing requirements have changed over the past few years, and the filing requirements are different for the IRS than they are for the Franchise Tax Board.  For 2012, the filing requirements are as follows:

IRS Requirements

Form to File
If your gross receipts are:
990-N 
Normally equal to or less than $50,000
990-EZ
Normally less than $200,000 and total assets are less than $500,000
990
Equal to or more than $200,000 or more and total assets are equal to or more than $500,000

FTB Requirements

Form to File
If your gross receipts are:
199-N
Normally equal to or less than $25,000
199
Normally greater than $25,000

All non-profit organizations must file one of the above returns.  If you qualify to file forms 990-N and 199-N, these are postcard filings that can be done very easily online.  If you need more information you can check the IRS or Franchise Tax Board websites, or contact your tax preparer.

Speak and Be Spoke(n)!

So, tell us!  Do you have any lessons learned to share with your fellow nonprofits regarding tax filing requirements?

Spokes’ HINDsight

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What do you & Spokes do?

I am the CEO of Spokes, a nonprofit organization that provides training and resources to the Directors, executive management and staff of nonprofits to help them better manage their organizations, meet compliance standards and exceed expectations of the public trust.

What was the original goal tied to your HINDsight?  What did you set out to do?

We wanted to redefine the way Spokes measured its programmatic success.  Historically, our organization quantified its success based on the number of workshop attendees or resource libraries.  We could assume or hope that we had some impact on improving the management skills of those we served, but we didn’t know for sure.

The idea was to create an online assessment tool, eventually named the Nonprofit Capacity Assessment Tool (NPOCAT), that allowed nonprofit organizations to measure how they were performing in key management areas.  The tool would gather input from both Directors and staff and provide an easy-to-read compilation report.  Spokes would review that report and, where the scores were lowest, identify and provide resources to improve performance in that area.  Organizations would take the assessment at least annually, and, as their scores (hopefully) increased, we could confirm our impact and success toward our mission.

What actually happened?

I, personally, spent several months identifying well-reputed measurement tools, negotiating partnerships and permissions to use them and working with a hired computer programmer to design and launch the tool. We invested $5,000 into the creation of the tool – a considerable amount for our modest budget. I promoted the new tool widely to our members and throughout our community.

Then we launched it and the first few folks used the assessment.   Lots of folks had complaints.  For some, the assessment questionnaire was way too long and burdensome (approx. 80 questions).  For larger organizations, it was a bit redundant as some already had to conduct similar assessments for their industry certification programs.  For smaller organizations, the majority of our users, there was a major disconnect.  Where we used terms like “Human Resources,” smaller, all-volunteer organizations stumbled assuming that the term only extended to employees.  In our opinion a nonprofit organization’s human resources include all volunteers and staff.   It was clear that the tool was going to need a major re-writing before it would become widely-used and valued.

What was the final outcome?  What did you learn?

Ultimately, we have chosen not to rewrite the NPOCAT.   We may still rewrite and reconfigure it at a later date, but for now, we’ve put it to rest and replaced it with a different, easier-to-use tool – the Standards for Excellence Organizational Assessment and Implementation Planning Tool©.  It will require more effort on our part to compile the results of the tool, but the adoption of the tool will be easier and the ease-of-use for our members will be much improved – and these are critical steps as we seek to measure our success.

In HINDsight, I would not have invested in programming the tool before I did more pilot study.  Although the tools we adopted for the NPOCAT had already been tested and piloted, they hadn’t been tested with our local target audience which is very unique in its number of smaller organizations.  The new tool was created for theMaryland nonprofit sector, which mirrors the SLO County nonprofit sector in both quantity and budget size.  I know to test a survey before implementing it, but I failed to recognize this tool as the survey that it essentially is.  To have tested sections of questions using a less expensive resource like SurveyMonkey, which we already use, would have allowed me to recognize the problems, program the tool differently and improve our chances for a more successful launch of the NPOCAT.  It was an expensive lesson to learn, but one I won’t forget.  There is some more advanced support curriculum for the new tool that comes with a considerable price tag.  Before we invest this time, I am focusing just on the basic tool.  So far, the response has been extremely positive and, if it continues, we’ll be able to make additional investments with confidence.

Lessons from Greg Hind

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“Ever tried, ever failed.
No matter.
Try again, fail again,
Fail better.”
–Samuel Beckett, Westward Ho!

Although this quote comes from a Samuel Beckett play, it could easily (albeit mistakenly) be attributed to Philanthropist & Entrepreneur Greg Hind. Greg successfully started 6 companies and filed numerous patents that have helped revolutionize the athletic sportswear industry. All of his business success, however, came with its share of failures – products that didn’t sell, materials that didn’t function and a partnership that went awry.

Most recently, Greg played an instrumental role in launching the newly restructured and redefined Spokes business model. And, like all new adventures, we’ve faced our share of toe-stubbing and stumbles as we learn to “walk” our new path.  Greg, who was every bit as generous to Spokes in his mentorship as he was with his financial support, never let me become disheartened when we had a “fall.”  In fact, he delighted in it.  And, I’ll tell you why.

Greg once told me how, when his sportswear business was booming, every phone call he received was another organization asking him to be a guest speaker and share his strategies for success.  And, yet, when the same business suffered a major setback, his phone was silent.  He found it ironic that it was in the process of recovering from a failure that he truly honed his management skills.  That was the moment when he had the most to offer other aspiring entrepreneurs, but no one thought to ask.

I think of that story often when I’m facing a challenge.  Greg taught me not to let the stigma of failure keep me from what will be my best learning opportunities.  It is a value that we have adopted for the entire Spokes organization and seek to extend to our members. And, so, with great excitement, I am pleased to celebrate Greg’s legacy with the inaugural publishing of our new HINDsight column.

In every HINDsight column, we will invite individuals to share a failure that they have experienced within their work, what they learned and how they recovered.  Our goal is to remove the stigma attached to failure, share the wealth of learning and experience that exists throughout the members of the nonprofit sector and create a network of support to help each other recover from our stumbles.

We hope you will join us in honoring Greg as we break a few spokes, repair them and roll forward as better, healthier and stronger nonprofit professionals and organizations.  The ride may be bumpy, but it will be inspiring!

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