Tuesday, December 10, 2019

TOOL 8 – The Board's Annual Fundraising Audit


Pop Quiz on Fundraising Practices!

Suppose…at your next board meeting, your CEO and chief development officer announced:


Good News! Our total annual giving for our recent fiscal year was the largest in our ministry’s history.”

Bad News! The total number of donors has decreased (even though giving is up) over the last three fiscal years.”


Does the good news exceed the bad news? Should the board be concerned? Experienced board members would likely ask to see the data. That’s why Tool #8 is a helpful annual checklist for your board.

TOOL #8: THE BOARD'S ANNUAL FUNDRAISING AUDIT
Use this TRUE OR FALSE annual audit as a first step in assessing if the ministry is communicating giving opportunities with integrity and accuracy—and whether or not the board understands and affirms the ministry’s current fundraising practices.


Tool #8 in the new resource, ECFA Tools and Templates for Effective Board Governance, is one of six assessments in Part 2 of this jam-packed 271-page resource. 
John Frank and Scott Rodin recommend that boards develop reporting, measurement, and accountability tools regarding expectations between the CEO, the board chair, and the Chief Development Officer—and set policy and budgets according to those expectations. They add:

“By having solid reporting tools tied to your key performance metrics, you will be able to spot trouble early and respond.” (Read Chapter 3, “The Role of the Board in Development,” in their helpful book, Development 101.)

The big idea in Tool #8: in addition to regular reports you already review in your good governance practices, this annual checklist of 10 statements will keep the board informed. The two-page checklist asks for a TRUE or FALSE response to each statement—and includes space for answering the question, “How does the board know?” Examples:

TRUE OR FALSE?
#2. “The board understands the ministry’s fundraising program relating to raising restricted donations.”
#6. “The board knows if staff or external fundraisers are being compensated on the basis of a percentage of funds raised.”
#9. “The board is compiling, analyzing, and leveraging giving data to serve and support its giving base.”

A sample completed checklist is included with Tool #8 and features color-coded “Ministry Dashboard Signals” in the “How does the board know?” section:
   • Red: Act
   • Yellow: Watch
   • Green: Celebrate

After you review the 10 statements, ask your development team to brief the board on your ministry’s “theology of development.” When you have a written document on your theology of development, you’ll appreciate the guidance it gives to the CEO, the CDO, and the board to ensure that all fundraising practices are in alignment with the ministry’s mission, vision, values, and theology. (See the book, Development 101, for a sample document.) 

Order the tools book from Amazon by clicking on this title: ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board, by Dan Busby and John Pearson. The book gives you full access to all 22 tools and templates—formatted as Word documents so you can customize the tools for your board’s unique uses.

BOARD DISCUSSION: Around the table, answer TRUE or FALSE to this statement: “#4. The board is aware of communication being shared with givers concerning the potential of over-funding or under-funding of projects for which funds are being raised.”

MORE RESOURCES: Could your board members pass a pop quiz of fundraising practices? Read Scott Rodin’s color commentary blog on Lesson 24, “Ministry Fundraising 101 for Board Members” (click here) in Lessons From the Nonprofit Boardroom: 40 Insights for Better Board Meetings, by Dan Busby and John Pearson. Rodin notes: “As board members, we must understand the ideology/theology behind our development strategy. That will drive our desire for funds to be raised according to Biblical ethics, and used as the giving partner requests.”

Tuesday, December 3, 2019

TOOL 7 – The Board's Annual Legal Audit


Use This Annual Checklist to Monitor Legal Issues

What if—at your next board meeting—senior staff reported this bad news (a RED alert on your “Ministry Dashboard Signals” report)?


“As of the 30th of the month,
our ministry was $100,000 below the cash reserves threshold
required by our mortgage loan covenants.” 

TOOL #7: THE  BOARD'S ANNUAL LEGAL AUDIT
Use this TRUE OR FALSE annual audit checklist as a first step in assessing your ministry’s compliance with applicable local, state, and federal laws and regulations.


Tool #7 in the new resource, ECFA Tools and Templates for Effective Board Governance, is one of six assessments in Part 2 of this jam-packed 271-page resource. This critical tool will educate your board members on what they should be monitoring and might also enable them to sleep better at night!


The big idea: in addition to regular reports you already review in your good governance practices, this annual checklist of 17 statements will keep the board in-the-know. The two-page checklist asks for a TRUE or FALSE response to each statement—and includes space for answering the question, “How does the board know?” Examples:

TRUE OR FALSE?
#2. “Appropriately experienced legal counsel has reviewed the articles of incorporation, bylaws, and board policies in the last three years.”
#10. “All filings for the ministry’s copyrights and trademarks are current.”
#17. “We have not borrowed any of the restricted asset balances to fund operational expenses in the last year.”

A sample completed checklist is included with Tool #7 and features color-coded “Ministry Dashboard Signals” in the “How does the board know?” section:
   • Red: Act
   • Yellow: Watch
   • Green: Celebrate

Why checklists? Read my review of The Checklist Manifesto. Whether building skyscrapers or prepping for surgery, checklists are being used with increased effectiveness, says Atul Gawande. In a recent global experiment, a two-minute pre-surgery team review of a standard checklist has dropped infection rates, death rates and complication rates by a staggering amount.

Order the tools book from Amazon by clicking on this title: ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board, by Dan Busby and John Pearson. The book gives you full access to all 22 tools and templates—formatted as Word documents so you can customize the tools for your board’s unique uses.

BOARD DISCUSSION: Around the table, answer TRUE or FALSE to this statement: “#5. We are in compliance with our loan covenants.” How does the board know this?

MORE RESOURCES: And speaking of surgeons, would you trust a surgeon who stopped learning? That’s the subtitle to Lesson 1, “Wanted: Lifelong Learners,” in Lessons From the Nonprofit Boardroom: 40 Insights for Better Board Meetings, by Dan Busby and John Pearson. Guest blogger Ralph Enlow notes this about lifelong learning: “…I find that the fatal combination of passivity and agenda clutter conspires to crowd out efforts to walk the talk of continuous board development.”  

Tuesday, November 26, 2019

TOOL 6 – The Board’s Annual Financial Management Audit


20 True or False Questions! (And…how does the board know if it’s true?)

Dan Busby notes, “In the worst case scenario, clarity of ministry finances is a key to avoiding a financial shipwreck. In the best case, clarity prevents a ministry from becoming an embarrassment to Christ.”

Today’s tool features 20 statements that can be adapted for your ministry. Ask your CFO to provide the answers for the question, “How does the board know?”

TOOL #6: THE BOARD’S ANNUAL FINANCIAL MANAGEMENT AUDIT
Use this TRUE or FALSE audit annually as a first step in assessing your ministry’s financial health and integrity. 


Tool #6 in the new resource, ECFA Tools and Templates for Effective Board Governance, is just one of six assessments in Part 2 of the book that will both educate your board members and enhance your board’s competencies in financial management, legal, fundraising, and other key areas.


The big idea: trusted ministries manage resources with integrity. Boards should know and understand the three foundations of “Trusted Resource Management.”

#1. Understanding Finances: “Trusted ministries acknowledge the challenges of understanding nonprofit finances. It is certainly not a one-to-one correlation with the finances of a for-profit organization.”
#2. Achieving Appropriate Transparency
#3. Minimizing Fraud

Note: To go deeper on these foundational anchors, read TRUST: The Firm Foundation for Kingdom Fruitfulness, by Dan Busby.

Your board should expect clarity and honesty from the CEO, the CFO, staff, and the board’s finance committee. To provide clarity—so board members understand financial reports and financial trends—the information should be presented with a variety of approaches (for the diverse learning styles of your board members) and can include verbal and written reports, dashboards, and graphs.

But there is another important step—an annual checklist. This two-page checklist asks for a TRUE or FALSE response to each statement—and includes space for answering the question, “How does the board know?” Examples:

TRUE OR FALSE?
#1. Our board receives timely, relevant, and accurate financial information that is readily understood by the board. 
#6. The average size of our contributions is increasing across all gift size ranges. 
#8. Our total unrestricted revenue is increasing.
#14. Our bank accounts do not exceed FDIC limits.
#18. All significant related-party transactions are reported to the board for their review and action.

A sample completed checklist is included with Tool #6 and features color-coded “Ministry Dashboard Signals” in the “How does the board know?” section:
   • Red: Act
   • Yellow: Watch
   • Green: Celebrate

Once you begin using this annual checklist, you will add it to your board agenda every year! 

Order the tools book from Amazon by clicking on this title: ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board, by Dan Busby and John Pearson. The book gives you full access to all 22 tools and templates—formatted as Word documents so you can customize the tools for your board’s unique uses.

BOARD DISCUSSION: Around the table, answer TRUE or FALSE to this statement: “#17. We have identified the three greatest financial risks of our ministry and the steps we should take to mitigate those risks.”

MORE RESOURCES: To go deeper on this topic, read Steve Moore’s color commentary, “Focus on Mission Impact and Sustainability. The ‘dual bottom line’ equips boards to address dead horses and sacred cows (or goats).” See Lesson 23, in Lessons From the Nonprofit Boardroom: 40 Insights for Better Board Meetings, by Dan Busby and John Pearson. 

Tuesday, November 19, 2019

TOOL 5 – The Board’s Annual Self-Assessment Survey


Look in the Mirror!

Peter Drucker wrote, “Self-assessment is the first action requirement of leadership: the constant resharpening, constant refocusing, never really being satisfied.”


Do boards really take this wisdom seriously? According to a recent ECFA governance survey, board members were asked: “In the last two years, have you had an outside person help your board look in the mirror to do self-assessment for how it could improve?” 
   • Good news: 31% said yes!
   • Bad news: 69% did NOT say yes.

There’s a plethora of possibilities in this week’s tool to help your board look in the mirror—to ensure you are constantly improving in God-honoring governance. 

TOOL #5: THE BOARD’S ANNUAL SELF-ASSESSMENT SURVEY
Select the board’s self-assessment survey option that best fits your board’s culture and your board’s aspirations for continual improvement.


Tool #5 in the new resource, ECFA Tools and Templates for Effective Board Governance, includes 30 robust pages of survey templates—for all shapes, sizes, and opinions of board members.


The big idea: every board (even the “best” boards) can improve, but if you don’t look in the mirror at least once a year, you’ll easily perpetuate boardroom routines that may no longer be effective.

This resource includes an introduction, “Why Assess?,” and three sections:
   #1. Do-It-Yourself (with seven add-water-and-stir evaluation options)
   #2. Assessments Facilitated by a Consultant or Board Coach
   #3. An assessment template: “Best Governance Practices” Survey

For a quick dip into the self-assessment pool, consider ECFA’s new board self-assessment, NonprofitBoardScore™. This free online survey delivers immediate feedback and is designed for board members to complete multiple times (perhaps every six months) to measure improvement. (Church board members can self-assess using ChurchBoardScore™.)

D-I-Y Option 5 (page 40) features a quick one-page 20-point board member self-assessment that asks board members to evaluate the board on a five-point scale from “Strongly Disagree (1)” to “Strongly Agree (5).” Questions include:
   • Our board ensures that the ministry has an active strategic planning process in place.
   • Our board annually affirms and “owns” the ministry strategy.
   • We expect every board member to be an annual giver.
   • Our board has policies—and the spiritual integrity required—to ask an underperforming board member to resign.
   • Our board approves the CEO’s annual measurable goals that align with the strategy.

The survey also lists the average scores of 1,754 board members who completed the ECFA survey in 2019—so you can compare your ratings with other board members.


Why look in the self-assessment mirror? Peter Drucker adds, “Self-assessment can and should convert good intentions and knowledge into effective action—not next year but tomorrow morning.”

Order the tools book from Amazon by clicking on this title: ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board, by Dan Busby and John Pearson. The book gives you full access to all 22 tools and templates—formatted as Word documents so you can customize the tools for your board’s unique uses.

BOARD DISCUSSION: What committee or board member is tasked with conducting the board’s annual self-assessment?

MORE RESOURCES: Share this one-question discussion starter at your next meeting: “You’re driving away from a typical board meeting and you say, ‘That was a great board meeting today!’ Tell me, what happened at the board meeting to provoke that response?” Read more in “Ask the Gold Standard Question,” Lesson 2, in Lessons From the Nonprofit Boardroom: 40 Insights for Better Board Meetings, by Dan Busby and John Pearson. Read Tim McDermott’s color commentary by clicking here.

Tuesday, November 12, 2019

TOOL 4 – Five-Finger Feedback


Fast Feedback in 3 Minutes!

Ken Blanchard reminds us that “feedback is the breakfast of champions.” And Romans 12:3 (NIV) cautions: “Do not think of yourself more highly than you ought, but rather think of yourself with sober judgment…” 


So here’s a Fast Feedback Tool that will immediately improve your board and committee meetings. 

TOOL #4: FIVE-FINGER FEEDBACK
Use This Tool to Enrich Engagement and Immediate Feedback


Tool #4 in the new resource, ECFA Tools and Templates for Effective Board Governance, can be used creatively with the other 21 tools.

At the conclusion of a board’s Nominating Committee meeting we facilitated, the newly elected committee chair asked for feedback.

“At every board or committee meeting I chair,” he told us, “I always ask each participant to rate the effectiveness of our meeting. So on a scale of one to five (five is high), I’ll ask each of you to give me your rating. How did we do?”

The committee members each shared their rating—holding up the appropriate number of fingers—and also shared the rationale for the rating. Next, the Nominating Committee chair gave his rating—a five—which was an encouragement to everyone.

At our next meeting, I know two things will happen:
1) We’ll be asked to rate the meeting.
2) Throughout the meeting, we’ll be thoughtfully contributing (listening more than talking) to help the ratings stay high!

It’s a brilliant idea—and it took less than three minutes.

Order the tools book from Amazon by clicking on this title: ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board, by Dan Busby and John Pearson. The book gives you full access to all 22 tools and templates—formatted as Word documents so you can customize the tools for your board’s unique uses.

BOARD DISCUSSION: What if…you’re the chair and the Five-Finger Feedback exercise reveals low scores (just one or two fingers up)? What would you say or do?

MORE RESOURCES: If you prefer paper-and-pencil surveys, check out the “Bonus Resource Tool” on page 30. You can download, customize and then distribute this quick five-question survey just before adjournment. The five-minute evaluation asks board members to rate their preparation, their engagement in the meeting, and the overall engagement of the board. Plus, there’s room to list a highlight and a “lowlight.” The last question is a fill-in-the-blanks request: “Next month’s meeting would be more effective if…”

Tuesday, November 5, 2019

TOOL 3 – Board Nominee Orientation: Table of Contents


Don’t Swallow the Board Myth!

“Recruit board members for their passion, not their position. Don’t swallow the board myth that says you need a CPA, an attorney and a fundraiser on your board. People in those positions might make great volunteers, but less-than-loyal, uncommitted board members are the last thing your organization needs.” (From: Chapter 14, “The Board Bucket,” in Mastering the Management Buckets, by John Pearson)


So how do you ensure that you have the right board candidates in your prospect pipeline who also understand your history, your culture, your strategic plan—and the dozens of other topics and issues that nominees should understand before they join the board? This tool will help! 

TOOL #3: BOARD NOMINEE ORIENTATION: TABLE OF CONTENTS
Inspire Qualified Board Prospects to Consider Board Service—by Giving Them a Comprehensive Overview of Your Governance Documents


Tool #3 in the new resource, ECFA Tools and Templates for Effective Board Governance, builds on the first two tools—“Tool #1: The Pathway to the Board,” and “Tool #2: Board Nominee Suggestion Form.”


This 31-tab table of contents can be created in a three-ring binder (for old school board prospects), or created in a password-protected online version. It includes seven sections:
   • Introductory Materials
   • Board of Directors (bylaws, Board Policies Manual, recent board meeting agendas, etc.)
   • Finance, Budget, IRS, ECFA Reports
   • Strategic Plan and Metrics 
   • Team Members (organizational chart, senior team mini-bios, StrengthsFinder assessments, etc.)
   • Development (three-year goals and the fundraising role of board members)
   • Programs and Services (a “menu” of programs—and the annual evaluation process)

What Does Our Primary Customer Value? In the strategic plan section, many boards include their answers to Peter Drucker’s “Five Questions Every Nonprofit Organization Must Answer.” The questions:
   1. What is our mission?
   2. Who is our customer?
   3. What does our customer value?
   4. What are our results?
   5. What is our plan?

Many Nominating Committees will keep an updated version of the Board Nominee Orientation Materials (a three-ring binder or an online version) and use it as part of the “dating” process with a serious board prospect. 

But caution! Your prospects will likely be diverse. Using the social style language—are they analytical, driving, amiable, or expressive? So customize your one-on-one conversations according to your prospects’ social styles (not yours!):
   • Analyticals appreciate facts and information.
   • Driving styles prefer bullet points and executive summaries (don’t mention 31 tabs!).
   • Amiables are inspired by relationships and stories.
   • Expressives absolutely love four-color documents and Big Visions about the future! (And, if there’s a microphone in their future—they are blessed!)

For more on social styles—and how to communicate effectively with each style/board prospect, you’ll enjoy reading How to Deal With Annoying People: What to Do When You Can’t Avoid Them, by Bob Phillips and Kimberly Alyn.

You can order the tools book from Amazon by clicking on this title: ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board, by Dan Busby and John Pearson. The book gives you full access to all 22 tools and templates—formatted as Word documents so you can customize the tools for your board’s unique uses.

BOARD DISCUSSION: In the four phases of board recruitment—Cultivation, Recruitment, Orientation, and Engagement—where are we the most effective and where are we the least effective? What’s our next step? 

MORE RESOURCES: Download the short video, the facilitator guide, and the viewing guide for “Recruiting Board Members - Leveraging the 4 Phases of Board Recruitment: Cultivation, Recruitment, Orientation and Engagement,” the first of four resources in the ECFA Governance Toolbox Series. Click here.

Tuesday, October 29, 2019

TOOL 2 – Board Nominee Suggestion Form


Avoid the “Friend of a Friend of Cousin Eddie Syndrome”

“The problem is, most board cultures are developed by default, not by design,” writes Jim Brown in The Imperfect Board Member.


The best boards are intentional—not haphazard or random—about suggesting board prospects who meet the board-approved criteria. A friend of a friend of your Cousin Eddie might/perhaps/someday become an effective board member—but he or she must be evaluated against objective criteria. And prayer must precede appointment! 

TOOL #2: BOARD NOMINEE SUGGESTION FORM 
Recommend People for Your Prospect Pipeline Who Meet the “6 D’s Criteria”

Many boards leverage the easy-to-use “Board Nominee Suggestion Form” included in ECFA Tools and Templates for Effective Board Governance. Tools 1, 2, and 3 are the lead-off hitters in “Part 1: Selecting and Training Excellent Board Members.” The book gives you full access to all 22 tools and templates—formatted as Word documents so you can customize the tools for your board’s unique uses.


This suggestion form will optimize two critical governance values for your board:
• First, the suggestion form will help educate board members to suggest only prospects that meet the board-approved criteria. This will eliminate the “Friend of a Friend of Cousin Eddie Syndrome” and save you hours and hours of time (and expensive steak dinners!).
• Second, because board members are considering at least six criteria (see the “6 D’s” in the book), important qualities of God-honoring lifestyle and character will be considered early on in the process.

Here are two of the “6 D’s” to consider:

Discerning Decision-Maker: Prior experience in making wise policy, financial, strategy, and personnel decisions. (Is this person competent in both hiring and firing decisions?)”

Doer: Walks the Talk! Reference checks affirm a God-honoring lifestyle and character. Humble, prayerful, high integrity in all relationships. Affirms our statement of faith.”

The other four “D’s” include: Demonstrated Passion, Documented Team Player, Diligent and Faithful Participant, and Donor.

When you customize “Tool #2: Board Nominee Suggestion Form” for your board, you’ll realize why this book is subtitled, “Time-Saving Solutions for Your Board.” Follow the eight steps in this tool to inspire your board to pray and discern who—in their networks—might be possible prospects for board service.

Click on the title to order from Amazon: ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board, by Dan Busby and John Pearson.

BOARD DISCUSSION: In Matthew 6:21, Jesus said, “For where your treasure is, there your heart will be also.”  Many boards follow the “6 D’s” criteria, including the requirement that a board prospect already be a generous giver. (See the definition of a “generous giver” on page 19 of the book. Board members at all income levels can be generous.) What’s our board policy on this?

MORE RESOURCES: Read Terry Stokesbary’s guest blog on “Date Board Prospects Before You Propose Marriage,” one of 40 color commentaries from the book, Lessons From the Nonprofit Boardroom. Click here.