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Originally published in the February 2012 issue of Board & Administrator, available electronically to current subscribers at publication.

Executive Director Kelly Rosenleaf (Missoula, Mt.) said that while the transition to a board that actively fundraises is still in progress, she’s learned some valuable lessons about the board and her organization.

After an organizational assessment one year ago that was followed by a strategic planning process, two areas stood out as needing attention, Rosenleaf said. “These were marketing and fund diversification, which are interrelated,” she said.

The assessment consultant pointed out that the organization’s office, marketing materials, and even the mission statement seemed more like those of a government agency than a nonprofit charitable corporation, Rosenleaf said.

That finding was supported by planning work with stakeholders. “During the strategic planning process when we held interviews with stakeholders, they didn’t even realize we were a charitable organization,” she said.

“Our clients thought we were a branch of government,” Rosenleaf said.

The vast majority of the organization’s funding is from government grants, Rosenleaf said. “Obviously, diversified funding and a clearer presentation of our cause and organization were needed,” she said.

“All of this information from people outside the organization was invaluable in motivating our board to make a change and increase commitment to raising money,” Rosenleaf said.

Changes included:

• All board members must make a personal contribution to the organization. “No exceptions to this rule,” said Rosenleaf. “We ask that they make what is a meaningful contribution for them and that our organization be among their top three charitable gifts.” The board now has a 100% giving rate for the past three years, she said.
• The organization hired an experienced development director. The organization lacked this development skill set on staff, Rosenleaf said. “It’s an investment of our resources, but one we felt was needed to succeed,” she said.
• Targeted board recruitment. “We recruited two new board members specifically because of their robust networks and let them know we expected them to fundraise,” Rosenleaf said. “We also told them we wanted them to help connect us to their networks for fundraising.”
• Training in fundraising for board members. This has been necessary, because the switch to a fundraising board resulted in some board members leaving, Rosenleaf said. “It’s also been more difficult to recruit board members since we have clearly stated our fundraising expectations,” she said.
• Board commitment to fundraising activities. For the first direct mail fundraising appeal in the organization’s 42-year history, many but not all board members shared names for the mailing, Rosenleaf said. “We are also now in the middle of our first major donor campaign, which has required more training and support for board members,” she said.
• Different roles for board members. “Not all board members will be ‘askers,’” Rosenleaf said. One board member is not comfortable calling on her professional network for money, she said. “But she has helped in other ways,” Rosenleaf said. “She serves as a trustee for a foundation, and let us know of the foundation’s priorities and encouraged us to apply for funding from this new source. “She has also helped us determine how to deal with complicated tax assets related to donations,” Rosenleaf said.

While the board has experienced modest success with its fundraising efforts, there is a long way to go, Rosenleaf said. “We’ve not made as many contacts as we hoped and haven’t come close to our modest goal,” she said. “Perhaps we need to offer the board more coaching and support, or maybe it’s just a process to get this fully rolling and a part of our culture.”

Originally published in the January 2012 issue of Board & Administrator, available electronically to current subscribers at publication.


Two CEOs in the same small community alternate service on each other’s boards. Is that any cause for concern?

Terrie Temkin, principal, CoreStrategies for Nonprofits, Inc., Miami, Fla., said that on the surface, there may be sound reasons for this type of arrangement — trust and expertise among them. “Because these two individuals trade places on their boards, they clearly trust one another,” she said. That type of support can be valuable, said Temkin.

In addition, in smaller communities, there may be limited resources when it comes to quality board members and professional support, she said. “That’s something that could hold the CEOs together, too,” Temkin said. “They rely on one another.”

Swapping service on each other’s board does not, on its face, indicate anything untoward is occurring, Temkin said. There is, however, a perception issue to consider, she said. And perception can be very important for nonprofit organizations, she said.

“The perception of conflict of interest is probably enough to suggest that they end the relationship,” Temkin said. “You don’t want the community losing trust in either organization.”

Mutual back scratching on issues like salary are less of a concern than community perception. If the CEOs are experienced, they are likely abstaining and avoiding discussion on issues like salary already, Temkin said.

“But it’s the perception in the community that’s troubling,” Temkin said. Volunteers, staff, patients and donors could wonder if they might be affected by decisions made without a say because of an arrangement between the two CEOs, she said.

There are other factors to consider, too. If any CEOs were to consider serving each other’s boards, they need to protect themselves, Temkin said. Both organizations’ policies on conflict of interest would require a careful review, she said. If the policies are not very specific about members not using board service to benefit themselves, both organizations open themselves up to claims of private inurement, Temkin said. The organizations could potentially have to fight to avoid not only steep fines, but could incur bad publicity, she said.

Meeting minutes are another area that needs scrutiny when local CEOs serve each other’s boards, Temkin said. “Do they in any way imply a quid pro quo between the executives and their organizations?” she said. Meeting minutes are a legal record and can be subpoenaed, she said.

There are other important considerations at work that argue against service on each other’s boards, Temkin said.

• Are the organizations building leadership for the future? If the administrators continue to serve their boards, they are going back to the same people over and over again for board talent, Temkin said. What happens if one of the parties moves away or retires?

“They have not built their boards for the future,” Temkin said.

• How do board members view the relationship? The CEO should not choose the board, Temkin said. “That’s the board’s role,” she said.

It can make the executive director look suspect when she is pulling people onto the board, Temkin said. “The board is the executive’s boss, and that person should not pick her own boss,” she said.

“Will board members come to say, ‘He doesn’t listen to me. He only listens to his buddy,’ because of the relationship?” Temkin said. There is a great potential for the rest of the board to say they will not give it their all because their ideas don’t count as much as the other guy’s, she said. “When that happens, you’ve lost the whole reason for having a board,” Temkin said.

• What is the board’s reasoning if they support this arrangement? If the board elected to pick the other organization’s CEO to serve, why did they make that decision? “Is it to make their CEO happy?” Temkin asked. If the board sees value in having this individual serve on the board, they need to communicate that to their community, she said.

• Is the board prepared to assume responsibility and blame? It’s important for the board to remember they as an entity are responsible for the organization, Temkin said. If there are sanctions, board members will be personally responsible for the fines, she said. “If someone in the community says, ‘Wait a minute, there is a personal benefit at work here,’ and I’m on that board, I don’t want to have put myself at risk for having agreed to this arrangement,” Temkin said.

• Is the mutual service arrangement enough to cause people to stop volunteering or donating? If there is a perception of hanky panky, that can happen, Temkin said.

For information, corestrategies4nonprofits.com.

Originally published in the December issue of Board & Administrator, available electronically to current subscribers at publication.

Jeff Faux, founding president and distinguished fellow, the Economic Policy Institute, delivered a sobering message at the opening plenary of the BoardSource Leadership Forum about the economy and its future prospects.

Faux’s key message: Denial is not a strategy for nonprofit execs and their boards when it comes to charting a course for the future.

The cause of the continuing economic mess is related to the flattening of real wages between 1979 and 2007, at a time when consumers and the country went deeper and deeper into debt. “Eventually it all collapsed,” Faux said.

The net effect on people and jobs is that the country has 14 million unemployed and 16 percent of the workforce has given up on trying to find a job, Faux said.

“Banks aren’t lending because no one is creating new businesses and expanding,” Faux said.

Here’s Faux’s take on where we are heading as a nation and what action nonprofits should consider now:

• Expect slow growth for the next few years. Regarding the coming U.S. presidential election, it will not matter to the economy which party wins. “Four years from now we won’t be back to where we were pre-crash,” Faux said. The Economic Policy Institute estimates it will take 15 years to get employment numbers back to a healthy level, he said.

“It’s best to pay attention,” Faux said. “Under the best scenario, it’s going to be tough times, and more state and federal cuts. These will affect organizations from education to the arts.”

Faux said food banks especially will be under great pressure, with poverty numbers the highest they’ve been since 1993 and the rate of poverty the highest it has been since the Economic Policy Institute started tracking numbers. “Three-quarters of those below the poverty line are working, too,” he said.

• You can’t afford to bury your head in the sand. “Denial is not a strategy,” Faux said. “The country will need nonprofits now more than ever.”

State and federal governments will expect nonprofit organizations to take up the slack as the cutbacks in payments to nonprofits continue and for nonprofits to do so with fewer resources. “You can expect fierce competition for resources and for foundations to field more proposals than they can possibly hope to fund,” Faux said.

• Emphasize efficiencies. Faux said nonprofits will be forced to become more efficient and consider strategies they might have never considered before. “Ask yourself, ‘Does your city or state need three organizations doing the exact same thing?’” Faux said.

And while a merger might be the efficient move, it creates a nasty situation where execs are determining who keeps their job and who doesn’t, Faux said.

• You can’t go it alone. “If the country is to get back on track, there will need to be a sense of cooperation and self-help,” Faux said. “We need a value change. Dog eat dog individualism is not America.”
• Execs should ratchet up their job descriptions. Nonprofits should organize and join with others in the community and country. “You can’t afford to hunker down,” Faux said.
• Work at changing the national and community priorities. “We need to think about the future in a different way,” Faux said. “Start a conversation about what kind of country we want.”

For information, www.boardsource.org; www.epi.org.