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A Nonprofit CEO is a Peer – Not a Powerhouse

Some nonprofit CEOs make a fetish out of describing their boards and/or board chairs as their “bosses.” Others, for example, can see the description, as a parent-child relationship by funders. The parent, the board, may be strong, but can the child, the CEO, implement a grant or donation? Some CEOs openly like to perpetuate this type of relationship because when bad decisions come to roost, they can use the old refrain: the board made me do it.

My preference is that the board-CEO relationship be a partnership among peers focusing on achieving desired outcomes and impacts for the nonprofit. (I, with others, would make and have made CEOs, who deserve the position, voting members of their boards!)

There are many precedents for a nonprofit CEO to become a peer board member, some without voting rights, some with full voting rights. One nonprofit group is university presidents, where shared governance with faculty bodies can be the norm. For example, when General Eisenhower became president of Columbia, he referred to the faculty in an initial presentation as “Columbia employees.” Later a senior faculty member informed him “With all due respect, the faculty is the university.”

Another nonprofit group is hospitals where the CEO may also be or has been the chief medical officer. The level of medical expertise needed to lead requires that a peer relationship be developed. Also if the hospital CEO is a management person, he and the chief medical officer must have a peer relationship, which extends to the board.

Hallmarks of a Peer Relationship

  • The CEO values the board trust assigned him/her, and carefully guards against the board receiving surprise announcements.
  • The board avoids any attempts to micromanage, a natural tendency for many nonprofit boards.
  • When a board member works on a specific operating project, it is clearly understood that he is accountable to the CEO for results.
  • The CEO has board authority to borrow money for short term emergency needs
  • The CEO understands need for executive sessions without his/her presence.
  • The CEO understands the need for robust assessment processes to allow the board to meet its overview duties.
  • Both board and CEO are alert to potential conflicts of interest which may occurs.
  • Both value civil discussion when disagreements occur.
  • The board realizes that nobody does his/her job perfectly, and it does not react to occasional CEO modest misjudgments.

Summary

Elevating a nonprofit CEO to a status of board peer does not automatically make the CEO a powerhouse. The board legally can terminate the CEO at will. However, in my opinion, the following benefits can accrue to the organization.

The peer relationship help will:

  • Help the organization to build a desirable public brand.
  • Allow a capable person to interface with the media.
  • Define a role for the CEO to lead in fundraising.
  • Allow the organization to hire better qualified personnel.
  • Allow the organization to present a strong management environment to funders. After all, top people readily communicate with people in similar positions.
Dr. Eugene Fram

About the Contributor: Dr. Eugene Fram

Dr. Eugene Fram is Professor Emeritus, Saunders College of Business, Rochester Institute of Technology. A well-established nonprofit author, consultant, board chair and volunteer director, he has served on 12 nonprofit boards and a number of business boards. In addition, Fram is the author or co-author of more than 125 journal articles on marketing, nonprofit and corporate governance issues. He is also the author of the new third edition of Policy vs. Paper Clips, a book that describes a trust-based nonprofit governance model that has been adopted or adapted by thousands of nonprofit organizations. His book can be located at: http://amzn.to/eu7nQl.

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