In corporate model, board holds CEO responsible

NONPROFITS INC.

July 12, 1993|By LESTER A. PICKER

Every summer I recommend that nonprofit executives take some time for themselves to read a professional work that is challenging, irreverent or controversial. The problem is finding such a work in the staid, conservative world of nonprofit management.

I happened to come across just such a work in the form of a book with a simple, yet deceptive title: "Policy vs. Paper Clips," a tiny book on governance, by management consultant and Professor Eugene H. Fram and free-lance writer Vicki Brown. It does not fit the mold of management books for nonprofits.

First, the book presents an argument for the corporate model of governance, certainly a challenging notion to most nonprofits. Second, the book is written as an exchange of letters between a fictitious chief executive of a nonprofit and his friend, who has just joined the board of a distant nonprofit. Finally, the book is accompanied by a question-and-answer audiotape featuring Fram, which summarizes some of the key points mentioned in the book.

"Policy Vs. Paper Clips" is similar in concept to the policy-making model advocated by consultant and author John Carver. Unlike Carver, Fram advocates giving the executive director the title of president or CEO and making him or her a voting member of the board.

Other distinguishing features of Fram's program are its use of only three standing board committees, a rigorous assessment of the CEO, crafting a budget from the bottom up and removal of the board from daily operations.

Fram makes an interesting point in his tape. He believes that the reason nonprofit boards meddle so much in daily operations is that they do not have the same degree of financial risk that many for-profit directors have. If they did, they would choose the more efficient and effective corporate model.

In this model of governance, the board assumes the tasks of long-range planning and holds the CEO responsible for meeting the mission, goals and objectives.

Fram is asked on tape to comment on how he would handle the typical situation of a board member being asked to help out with an implementation issue, such as putting a new accounting system in place. His answer is simple and direct. During the time the board member is helping with implementation, he must take off his board hat. He is a simple community volunteer at that point, responsible to the CEO. When he is done, the accounting system becomes an operational issue for the CEO and staff.

Another valuable point is that "board members who feel their time is being wasted usually don't speak up. They either quit coming to meetings or they resign." In our time-compressed world, community leaders do not want to spend the majority of their meetings arguing over the color of wallpaper. That is a volunteer-staff decision. Boards should be planning for the future, setting strategic direction and holding the CEO accountable for implementing that plan.

A factor critical to the success of this model is the working relationship between the CEO and the board chair. They must have a trusting relationship that enables them to separate policy from detail and hold each other's feet to the fire if they cross the line.

A troubling issue never dealt with in the book or tape is that of fund-raising. Early in the book, he refers to the financial pressures under which many nonprofits today find themselves. Yet, Fram dances around the topic of who should assume responsibility for fund-raising, and how the process should be implemented.

The book is easy to read, understandable and thought-provoking -- well worth the $20.95 price for both the book and cassette. It is available from Family Service America, 11700 West Lake Park Drive, Park Place, Milwaukee, Wis. 53224.

(Lester A. Picker is a philanthropy consultant. Write to him at 71 Bathon Circle, Elkton, Md., 21921; [410] 392-3160.)

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