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21st Century Nonprofit Boards Need to be Proactive in Strategy Development

Most Boards do not excel at strategy planning. In fact, when the subject is included on a meeting agenda, it usually produces a general lack of enthusiasm. A McKinsey study cited weakness in for-profit boards dealing with the topic. And in my opinion, similar deficits are endemic to nonprofit boards whose response to strategic proposals is often simply– “ to review and approve.”

What causes these vital governing bodies to be passive when the future of the organization is obviously at stake? First, most nonprofit boards meet between 8 and 12 times a year, for what averages to about 1.5 hours monthly. With an agenda crammed with compliance issues and staff reports, there is little time left for board members to dive deeply into a discussion of future transformative efforts on behalf of the organization. When a new strategic plan is developed (that may only occur once every 3-5 years, with a limited perspective), its implementation is not as rigorous as it should be—even in high performing boards.

According to the McKinsey study, only 21% of business directors claim to fully understand the firm’s total strategy. Because of their diverse backgrounds, the percentage of uninitiated nonprofit board members is probably similar or even lower!

Next, the study also reports: “…there is often a mismatch between the time horizons of board members and that of top management.” Since the median tenure for a nonprofit board member is between four and six years, it follows that management‘s experience with the mission environment exceeds the vast majority of board members. Since the outset of the 2009 recession, it becomes critical that a dialogue between board and management brings focus to economic priorities. The economic environment remains more dynamic, requiring much more discussion.

Questions that board and management need to consider to overcome these issues.

How well do board members under the mission dynamics?

In terms of nonprofit experience, management has a better understanding of the mission’s environment. As a result, management needs to be proactive in educating board members about the dynamics involved. This can take place a meeting, retreats, or engaging outside experts to interact with directors. Where it is possible and appropriate, management should invite directors to join them at local or regional conferences.

Has there been enough board-management debate before a specific strategy is discussed?

“Board members should approach these discussions with an owner’s mindset and with the goal of helping management to broaden its thinking by considering new, even unexpected, perspectives.” During these debates, management should provide information on key external trends affecting the mission. It also needs to review: strengths and weaknesses of staff talent to achieve the mission, the abilities of the nonprofit to differentiate itself, and to increase services to its clientele. All of this can keep the organization from perpetuating the status quo—providing small budget increments and keeping current clients satisfied, not seeking growth.

Have the board and management discussed all strategic options and wrestled them to the ground?

Nonprofit directors and managers are not used to having high-quality discussions like these. To provide bases for his type of conversation the board must view management as a set of peers with different responsibilities. “Creating a participative, collaborative dynamic while maintaining a healthy tension is critical.”

Developing strategy has always been complex—and becomes more so with a board’s increased involvement, which introduces new voices and expertise to the debate and puts pressure on management teams and board members alike to find the best answers.

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Dr. Eugene Fram
Dr. Eugene Framhttps://non-profit-management-dr-fram.com/
Eugene H. Fram, Ed.D., is an expert in nonprofit governance, a business consultant and an award-winning emeritus professor of the Saunders College of Business at Rochester Institute of Technology (RIT). He is also the author of six books and more than 125 published articles and has been widely quoted by national media on topics ranging from business to high-performance nonprofits. His blog platforms on nonprofit governance have in excess of 3500 followers. He is a past recipient of RIT's highest award for outstanding teaching and one of a very select group awarded the Presidential Medallion, given to those making exceptionally significant contributions to the university. In 2012, a former student anonymously contributed $3 million to endow an RIT Chair in Critical Thinking in his name, an honor Dr. Fram describes as "a professor's dream come true!" Over his distinguished career, he has served on 12 nonprofit boards overseeing diverse community, national and professional organizations, and also has served on five for-profit boards. His particular passion is helping nonprofit boards perform at high levels as more is expected of these boards today than most people realize. He is the author of Going For Impact – The Nonprofit Director's Essential Guidebook: What to Know, Do and Not Do, and POLICY vs. PAPER CLIPS - How Using the Corporate Model Makes a Nonprofit Board More Efficient & Effective.

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