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In This Edition

All Non-Profits Should Have A Management Manifesto

Tom recommends that you document your approach to non-profit management for everyone to see.

Laurentian U’s Lesson for Non-Profits

Laurentian University faced bankruptcy a few years ago. Learn why and what it teaches other non-profits.

An Optimistic View of AI and the Future

AI will benefit non-profits, but training in its use will be essential. Tom explains.

Last Edition’s Survey Results

In our last edition we asked: “Does your organization resort to the BIG LIE when recruiting board members?” Learn what our readers had to say.

The Gray Zone: Overlapping Responsibilities of the Board and the Executive Director

This Blast From The Past explores how to deal with issues that might be considered the prevue of the Board or of the Executive Director.

All Non-Profits Should Have A Management Manifesto

THE STORY

Recently I came across a booklet titled: The Collaborative Design Manifesto, authored by Cornerstone Architecture Inc. out of London, Ontario. The Manifesto explains the approach Cornerstone takes to designing a building, and emphasizes the importance of collaboration between the design firm and the client.

As I leafed through its pages, I was interested to see that Cornerstone had designed the building occupied by two of our clients, the Tillsonburg Multi-Service Centre and Community Living Tillsonburg. Both are housed under the umbrella of the Livingston Centre in that town. The Livingston Centre is a collaboration of community agencies and it is not surprising that an architectural firm that promotes collaboration was called on to design a building with the same purpose.

THE SKINNY

What is important to note about the Collaborative Design Manifesto, is that as you read it, you get a very clear idea of Cornerstone’s approach. This is a concept that non-profits can borrow and build on. So our recommendation for all you Executive Directors and CEOs out there, is that you consider developing your own manifesto. Doing so will give everyone connected to the organization a thorough explanation and understanding of how it is managed and will be a test for ensuring that all aspects of the organization have been considered and are spelled out.

Your management manifesto could include:

Your vision for the organization

The best part of being part of non-profit management is your opportunity to create a unique operation - i.e. something different and special. This is separate from organizational positioning that is described in terms of the organization’s vision, mission and values, a responsibility that is shared with the Board. Examples of management’s vision for the organization could be “a pioneer in affordable housing”.

Your structure

Provide an organization chart accompanied by an explanation of the considerations that went into creating that structure – e.g.

· Assigns all necessary roles and responsibilities

· Has the right number of people with the right job titles, the right responsibilities and qualifications/abilities, at each level in the hierarchy

· Is clear and easy to understand

· Is based on clear, accurate job descriptions

· Aligns with the strengths of individual members of the management team

· Expedites timely, effective decision-making

· Is adequately resourced while also being cost effective

· Allows for development and succession.

The role of planning and evaluation

Explain that the management team is committed to planning and then to evaluating the results achieved in implementing the plan. Then note that the Management Team ensures the existence of strategic plans to provide long-term direction to the organization and guides its day-to-day activities by developing and implementing yearly action plans that advance the organization’s strategic plan. Elaborate on those plans as follows:

Year plans include measurable goals, timeframes and responsibility for completion. Year plans are broken down by person, so each member of the Management Team has her/his own year plan which is part of the larger plan.
The management team involves non-management employees in pursuing the goals contained in the plans to the greatest extent possible.
The financial resources required to complete the plan are included in the budget which accompanies and supports the plan.
The Management Team evaluates its performance individually and collectively by comparing its achievements at the end of the year with the goals and actions committed to at the outset.

Your approach to providing direction to staff and to decision-making

Explain management’s approach to providing direction to staff and to decision-making:

Provides clear direction to staff.
Delegates as much as possible and promotes independent action and decision-making.
Is consistent in the way it directs people and makes decisions related to them.
Is clear on expectations and holds people accountable.
Makes decisions based on full information.
Provides clear and timely decisions and communicates them effectively.
Encourages input and feedback related to decisions.

The Importance of Information

Advise that the Management Team develops an information system that generates a complete range of useful, accurate and timely data. It then utilizes that data for planning and monitoring the work of the organization.

Communication, Communication, Communication

Emphasize that the Management Team is committed to communicating as much as possible to all staff. That communication with staff will be:

· Open

· Transparent

· Clear, concise and consistent

· Frequent

· Timely

· Provided using a variety of mediums

· Addressed to all levels of the organization

Continuous Imrprovement

Explain that the management team always wants the organization to be better. To that end, it:

· Elicits regular input from clients, staff, funders and other agencies related to their level of satisfaction with the organization and its services.

· Makes an ongoing commitment to improving all facets of the organization’s operation, including but not exclusive to its services. It uses its year plans to identify how this will be accomplished and measures progress to ensure improvement is happening. It communicates this commitment to the other stakeholders and engages them in the improvement process.

· Ensures the effective orientation of new members of the Management Team and the ongoing development of all members.

Comprehensive HR Strategies

Assure the reader that the Management Team is focused on its key asset – first line staff – and that it does so by developing and implementing comprehensive HR strategies related to hiring, orientation, utilization, supervision, professional development and retention. Those strategies include:

Making HR a critical part of long and short term planning.
Maximizing the resources allocated to the HR function.
Promoting independent action and decision-making, and teamwork.
Continuously offering encouragement to staff and acknowledging staff accomplishments, while encouraging staff to do the same for each other.
Striving to enhance the work experience of front line staff, to make it possible for them to develop their skills and to prepare them for advancing through the organization.
Evaluating individual performance regularly, identifying strengths and need areas and encouraging skill development.
Asking for input when planning and when evaluating the performance of the Management Team and acting on that input.

Avoiding major problems

Last, emphasize that the management team is dedicated to mitigating risk so the organization can focus on its mission, including by:

o Identifying risks related to clients, employees, the Board, property, finance, the broader community and itself.

o Developing strategies to minimize such risks, and for dealing with them effectively when a problem arises.

THE BIG IDEA

Creating a management manifesto will make your organization better. Be the first in your sector to have one. Start today!

Laurentian University’s Lesson for Non-Profits

The Story

You may have missed it, but a few years ago, Laurentian University in Sudbury was on the edge of bankruptcy. Between then and now, it has undertaken major changes and its financial house is in order. Why should you care? Because Laurentian is a non-profit, and lessons that Laurentian learned can help everyone else in the sector.

The reasons for Laurentian’s financial problems “…were the result of a combination of strategic decisions—including expansion plans for a satellite campus in Barrie and significant capital investments financed largely through debt—alongside external pressures such as a government-mandated 10 per cent tuition reduction and the COVID-19 pandemic. By February 2021, Laurentian could no longer meet its financial obligations and sought court protection under the Companies’ Creditors Arrangement Act.”

What will interest BIG IDEAS readers is that a lack of effective governance by Laurentian’s board of directors is considered to have been a key factor in creating its economic difficulties. A review by the Ontario Auditor General concluded that the board did not adequately exercise its oversight duties or assess the risks when making strategic decisions. It also noted that committees of the board lacked the necessary expertise, training, and resourcefulness required to effectively manage and oversee the university’s financial operations.

The Skinny

What the rest of us can take from Laurentian’s painful experience is that non-profit boards have a fundamental responsibility to ensure their organizations exercise financial prudence. No excuses.

The problem is that many people who join boards don’t have a financial background, and rely on others, usually the Treasurer, to keep the money side of things in order. They nod and smile while budgets are discussed, and raise their hands at the right time, but they have limited or no understanding of what they have approved.

To prevent that from happening to your Board, you can take two steps. First, ensure that the job description for a board member includes being attentive to its finances. It needs to be an expectation of everyone. Second, consider the approach taken by Margaret Beaupre, now Executive Director at Mainstream in St. Catharines, during her earlier tenure as Finance Director of that organization. Margaret’s practice was to provide all new Board members with the equivalent of Non-Profit Finance 101 for Board Members.

This comprised small group instruction, complete with binder, organized under the following headings:

Introduction

Ministry of Children, Community and Social Services Annual Reporting Requirements (MCCSS is Mainstream’s key funder)

Budget Preparation

MCCSS Budget Forms

Mainstream Financial Statements

MCCSS Quarterly Reports

Audit and Year End Reporting

Financial Policies

On the first page of her binder, she noted that “This overview ties in with the Board’s fiduciary responsibilities in regard to the financial stability of the organization and should explain in detail the financial systems in place currently.”

Margaret proceeded to explain how budgets were prepared, including where the money would come from and how it would be spent. “It is the Finance Committee’s responsibility to ensure that the Board understands and approves the budget, and answer any questions, in conjunction with the Executive Director, that may come forward.”

She reviewed the current year’s budget. She identified two kinds of internal financial statements, balance sheets and income statements, and explained the content and purpose of each. Again she referenced the Board role relative to those statements: “The Board of Directors receives monthly statements from the Executive Director. This is a tool for the Board to ensure financial stability of the organization.”

She explained how yearend was handled from a financial perspective, including the annual audit, which in many ways was the best protection a Board and an Executive Director had of ensuring financial due diligence. Last, she referenced the importance of financial policies for staff and for Boards that are ultimately accountable

The BIG IDEA

This type of training is a great tool and we recommend highly that you do what Mainstream has done.

(Editor’s Note: My thanks to Michel Piche for his article titled “Inside the Laurentian University Financial Crisis”. If interested, you can find it on the Internet.)

SURVEY results

In our last edition we asked: ““When recruiting new board members, does your board resort to the BIG LIE?”, the BIG LIE being that sitting on a board is easy and doesn’t take much time.

In response, 36% of BIG IDEAS readers said they did indeed resort to the BIG LIE. This indicates we still have work to do in framing volunteering on a board of directors as a way to benefit personally while contributing to the welfare of the community. Let’s do more selling and less begging!

Many thanks to all the BIG IDEAS readers who responded. Your contribution is appreciated, and makes Ontario’s non-profits and charities even better.

An Optimistic View of AI and the Future

The Story

Generative AI is here, and much of the discussion to date has focused on how to use it effectively. One issue that is receiving limited attention is that AI requires a new kind of training for staff, training that for the most part is lacking.

The Skinny

According to a KPMG Canada report, 74% of business organizations responding to its survey identified “understanding and adoption among employees as a top challenge in implementing the use of AI”. Others noted were ethical, security and cost barriers.

This is because just a quarter of respondents strongly agreed that their employees have the right skills to fully leverage the benefits of generative AI, with just the same percentage strongly agreeing that their organization provides mandatory generative AI skills training for leaders and employees.

Hence, almost all respondents said the integration of generative AI has made them rethink how they train and develop their employees.

If there is hope, it can be found at the end of the report: “Generative AI is not going to be the job-killer that many feared it would be, but it will certainly change the nature of work and how companies train their employees.”

The BIG IDEA

In one way or another, we will all have to get on board with the use of AI. Part of that process will involve giving employees the skills needed to maximize the benefits it can provide. Our BIG IDEA includes three steps: determine how AI can best serve your organization, identify the training staff will need to utilize it, then ensure such training is provided.

The Gray Zone: Overlapping responsibilities of the Board and the Executive Director

The Story

Conventional wisdom within the non-profit realm is that it is critical to separate the responsibilities of the Board of Directors from those of the CEO / Executive Director. Governance is the purview of the Board and operations the purview of the CEO / ED.

This means that Boards attend to the following:

o Legalities and compliance – e.g. re the Not-for-Profit Corporations Act

o Positioning (vision, mission and values)

o Strategic Planning

o Financial stability

o Profiling and promoting the organization

o Advocating for the organization and its cause

o Fundraising

o Risk management

At the same time, CEOs / EDs are addressing:

o Products/services

o Staffing

o Facilities

o Administration (HR, accounting, IT, maintenance)

o Management including operational planning, profiling, promoting, advocating, fundraising and risk management.

The Skinny

For the most part, it is pretty easy to keep these items separate. But there can be overlap. For example, in a service organization, the CEO / ED is considered the expert and therefore determines the services and how they will be offered. But the Board has an overriding responsibility regarding risk management. So who is the final decision-maker when a particular service seems to bring increased risk along with it?

Or, in finance, the CEO / ED ensures the accounting system is in place and that everything from purchasing to payments is attended to. But Boards have an overriding responsibility for financial stability and the Treasurer may want to get into the details of that system or how the money is being spent. To what extent should the Treasurer be commenting on systems or spending, if at all?

It is impossible to imagine that overlap will not arise from time to time between the duties of the Board of Directors and the CEO / ED. So, the prudent organization recognizes this reality and puts in place a methodology for recognizing and addressing it. As part of this process, the CEO / ED must be given licence to bring to the Board, instances in which they feel the Board is encroaching on the duties of management.

The BIG Idea

The conclusion is that while there may be clarity most of the time between what the Board should be doing versus the CEO / ED, there will always be gray areas. So my BIG Idea for this week is to entrench that concept in the workings of the Board and the CEO and in particular to have a mechanism for addressing situations in which it isn’t clear who should be attending to a particular issue or where one party thinks the other is encroaching on their responsibilities.